HwangDBS Vickers Research has re-rated the Malaysian property sector, calling it a “new dawn”

HwangDBS Vickers Research has re-rated the Malaysian property sector, calling it a “new dawn” on the back of upcoming mega initial public offerings, approval for new rail lines and the award of government land projects.

Beneficiaries include SP Setia Bhd, KLCC Real Estate Investment Trust (KLCC REIT), E&O Bhd and YTL Land & Development Bhd. Valuations are expected to be re-rated as sales and landbanking pick up.

Property analyst Yee Mei Hui said that it was business as usual now that the general election was over. There are likely to be no major changes in policies, as Federal and state governments for key markets in Kuala Lumpur, Selangor, Penang and Johor remain status quo. She said that launches should resume and sales should pick up as uncertainty dissipates.

“We upgrade E&O and YTL Land & Development to buy’ from hold’, and raise target prices across the board by 6% to 63%.

“For big caps, we like laggards like SP Setia, as its Battersea project in the United Kingdom is a game-changer to double earnings, while Malaysian Resources Corp Bhd stands to benefit from PJ Sentral, which could be the next KL Sentral,” Yee said.

“For exposure to Iskandar Malaysia, we see more value in small mid-caps like Crescendo Corp Bhd and Daiman Development Bhd versus UEM Land Holdings Bhd after the recent strong rally.”

She added that there would be potential competition from new bellweather stock IOI Properties Bhd and other Khazanah Nasional Bhd-led vehicles seeking listing, for instance, Iskandar Waterfront Holdings Sdn Bhd, Medini Iskandar or other potential themed attractions.

For the KLCC stapled security, Yee has factored in the potential injection of the Suria mall into the REIT, which will boost her sum of parts by 17%.

Yee said that the mega listings, which range from market capitalisations of RM9bil to RM13bil such as for KLCC REIT, Iskandar Waterfront and IOI Properties (which will be the largest developer by earnings), would help re-rate the sector.

“We are more positive on IOI Properties, given the dearth of sizeable entrepreneurial-driven developers with strong track records and earnings growth.

“The approval of the MRT 2 and 3 lines and the KL-Singapore high speed rail, along with the acceleration in awards of government redevelopment projects such as the Rubber Research Institute of Malaysia land in Sungai Buloh, the financial district of Tun Razak Exchange and Bandar Malaysia in Sungai Besi, should also boost interest in the sector,” noted Yee.

Source The star, May 11 2013

Confirmed: Bangkok’s Central Group will open mall in Shah Alam’s i-City

SHAH ALAM: Property developer I-Bhd and Thai mall specialist CPN Global Company Ltd have entered into a joint venture to build a 1.5 million sq ft mall in I-Bhd’s flagship development i-City with a gross development value of RM580mil.

I-Bhd would have a 40% stake via i-City Properties Sdn Bhd (ICP) in the joint venture while CPN would have the remainder stake via two locally incorporated companies – CPN Real Estate Sdn Bhd and CPN Malls Malaysia Sdn Bhd.

Construction for the mall will begin next year and is targeted for completion by the end of 2016.

“We are honoured to spur the economy with this agreement, more so given that this is the first fruits of foreign direct investments for the country after the May 5 general election,” founder and executive chairman of I-Bhd Tan Sri Lim Kim Hong said at the signing ceremony to mark the joint venture yesterday.

“At the end of the day, we envisage our shopping mall being a regional shopping paradise that is capable of boosting both the economic development of Shah Alam and Selangor as a whole,” Lim added.

CPN Real Estate, CPN Malls Malaysia and ICP would also enter into a shareholders agreement for the purpose of acquiring a part of the land in i-City to develop the mall.

The mall would be developed on a freehold plot of land measuring 11.12 acres with gross floor area of about 1.5 million sq ft and net leasable areas of 1 million sq ft.

The development marks CPN’s first foray into Malaysia.

“This important decision marks CPN’s first strategic move in Asean and our confidence in the Malaysian economy,” said CPN president and chief executive officer Kobchai Chirathivat.

CPN, according to a press statement, is the largest specialist developer and manager of large-format and integrated shopping centres established in June 1980 and listed since March 1, 1995 on the Stock Exchange of Thailand.

“We believe ICP’s expertise in construction management as well as local market understanding and strong government relations will greatly contribute to the success of this project. In the same way, CPN will contribute our expertise in retail property development to make this project a great success,” Chirathivat said.

The joint venture would be led by CPN while I-Bhd chief executive officer Datuk Eu Hong Chew said the company’s focus would be on developing the rest of i-City.

“We pass it to the experts as we want to focus on developing the rest of i-City. They will take the lead in design, building and managing the mall,” Eu said.

Meanwhile, I-Bhd posted a huge increase of RM4.92mil in net profit for the first quarter ended March 31 compared to RM819,000 a year ago on revenue which rose by 213.82% to RM27.14mil. It said in an announcement to Bursa Malaysia that the earnings were mainly due to profit recognition from ongoing projects of the property development division and the introduction of more theme park games under the leisure division.

Source The Star, May 14 2013, By DANIEL KHOO

Malton gets JCorp’s Pusat Bandar Damansara in exchange for VSQ

KUALA LUMPUR: Property developer Malton Bhd is selling a 20-storey office building located in Petaling Jaya to Johor Corp for RM140mil via an asset exchange exercise.

Malton said in a filing with Bursa Malaysia that a sale and purchase agreement was entered into between a wholly-owned subsidiary, Khuan Choo Property Management Sdn Bhd (KCPM), and Bukit Damansara Development Sdn Bhd (BDDSB), a subsidiary of JCorp.

It said the disposal of the property, known as VSQ would see KCPM and BDDSB enter into a “proposed asset exchange”, in which KCPM would acquire the redeveloped Pusat Bandar Damansara Kuala Lumpur (PBD Complex) from BDDSB worth RM140mil.

The consideration of RM140mil was arrived at on a willing-buyer willing-seller basis between KCPM and BDDSB after taking into account several factors including its net book and market values as well as potential future rental returns and capital appreciation of the office space.

As of June 30, the net book value of VSQ properties amounted to RM85.4mil based on the audited financial statements of KCPM while the valuation exercise carried out by CH Williams Talhar & Wong Sdn Bhd recently valued the VSQ properties at a market value of RM140mil.

“KCPM is able to dispose of the VSQ Properties which form substantially the balance development properties in V Square @ PJ City Centre on an en-bloc basis for a development profit of RM54.6mil; and it provides KCPM with an opportunity to invest in the office space under the subject entitlement which has very promising prospects for rental returns and capital appreciation as the property is located in a very prime and strategic location in Damansara Heights, Kuala Lumpur,” Malton said.

According to earlier reports, legal proceedings were begun by companies believed to be linked to Malton and JCorp concerning an old agreement to sell the PBD buildings last October but it is unknown if the legal issues surrounding the properties have been resolved. The case involves three units linked to Malton, which has initiated action against JCorp over a piece of land that the latter was supposed to have sold some years ago.

They demanded that JCorp hand over the land and buildings worth RM700mil.

Since then, PBD has been earmarked as one of the proposed mass rapid transit key stations and indications are that the property is now worth much more.

Source The Star May 14, 2013