Research firms positive on UEM Sunrise's acquisition of RM155m freehold land in Kelana Jaya

• In a note, Hong Leong Investment Bank said the 3.7-hectare land was fairly priced with a cost-to-gross development value ratio of 14.1%, given its strategic location.

KUALA LUMPUR (June 7): Research firms are positive on UEM Sunrise Bhd's acquisition of freehold land in Kelana Jaya for RM155 million.

In a note, Hong Leong Investment Bank (HLIB) said the 3.7-hectare land was fairly priced with a cost-to-gross development value (GDV) ratio of 14.1%, given its strategic location.

“The land is located in the mature neighbourhood of SS6 Kelana Jaya, with access to amenities such as SS6’s retail hubs and Paradigm Mall.

“It is also situated opposite Taman Bandaran Kelana Jaya, Petaling Jaya’s largest and one of the most well-known parks in the area," it said.

HLIB said the acquisition brings the group’s land bank in the central region to 175 hectares, and GDV to RM29.5 billion.

Post acquisition, the group’s net gearing will increase to 48.1%, from 45.9% in the first quarter of 2023.

Hence, HLIB maintained its "hold" call on UEM Sunrise, with an unchanged target price (TP) of 28 sen based on the group’s outlook, due to better visibility of its launch pipeline, activation of its high-value project, as well as the easing of the labour shortage condition.

Echoing HLIB, Maybank Investment Bank also reiterated its "hold" call on the developer, with a TP of 27 sen.

The land, which has an estimated GDV of RM1.1 billion, would likely churn out an annual net profit of RM30 million from the financial year ending Dec 31, 2026, the investment bank said.

At 10.50am on Wednesday (June 7), the counter had eased half a sen to 26 sen, with 1.56 million shares transacted.