| Investment Bank | PUBLIC INVESTMENT BANK |
|---|---|
| TP (Target Price) | RM22.72 (+13.6%) |
| Last Traded | RM20.00 |
| Recommendation | Neutral |
A recent announcement from Kuala Lumpur Kepong (KLK) details a significant land transaction and a joint venture with Mah Sing Group’s M Industrial Development S/B (MIDSB) to develop a substantial industrial park in Johor. The strategic move, involving 419.15 acres of freehold land in Kulai, is set to unlock existing plantation asset value and generate recurring income for the conglomerate. Public Investment Bank has reiterated its “Neutral” call on KLK, maintaining an unchanged target price of RM22.72.
Deal Specifics
The agreement involves MIDSB acquiring the 419.15-acre parcel from KLK for a total consideration of RM274 million, or RM15 per square foot. Concurrently, KLK will acquire a 40% stake in MIDSB, the entity responsible for developing the MS Industrial Park @ Kulai. This ambitious project carries an estimated Gross Development Value (GDV) of RM2.26 billion.
The industrial park is envisioned as a comprehensive development, featuring a mix of cluster, semi-detached, and detached factories, along with vacant industrial land designated for logistics hubs, warehouses, and data centres. Strategically located approximately 15.8km from Senai Airport and within 50km of major seaports like Pelabuhan Tanjung Pelepas and Johor Port, the site benefits from excellent connectivity to major highways, including the North-South Expressway, Second Link Highway, and Senai Desaru Expressway. The land transaction and subsequent development are projected to be completed by the second half of 2026.
Strategic Implications and Future Outlook
This venture is lauded for its potential to unlock significant value from KLK’s existing plantation assets. The project is also expected to contribute an estimated annual profit of RM10 million to KLK over the next decade. Beyond the immediate project, the 419.15-acre site forms a part of KLK’s larger 2,500-acre landbank in Kulai, earmarked for future developments encompassing industrial, commercial, and residential components. Upcoming connectivity enhancements, such as the Rapid Transit System Link and the Kuala Lumpur-Johor Bharu Electric Train Service, are anticipated to further enhance the valuation of KLK’s remaining land in the area.
This marks KLK’s third industrial project, signifying a strategic pivot towards property development. This increased focus is projected to significantly boost the property segment’s earnings contribution by 5% in the future, up from the current 2.4%. Public Investment Bank’s “Neutral” rating reflects an acknowledgment of the long-term benefits while maintaining a cautious, balanced view on the immediate impact on the stock’s valuation.
