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KUALA LUMPUR: SBC Corp Bhd, a contractor-turned developer with property projects in Peninsular Malaysia and Sabah and Sarawak, has picked up interest over the past one month as investors took note of its deep asset value. The company has seen its share price jump some 40.6% since the beginning of March. It closed last Friday at RM2.18, gaining 31 sen or 16.6% on the day itself after CIMB Research published its initiation report on the stock. At RM2.18, SBC’s market capitalisation stood at RM341.3 million.
CIMB analyst Nigel Foo, who has an “add” rating on SBC with a target price of RM3.96, said in the report that SBC was trading at a sharp discount to its revised net asset value per share (RNAV/share) of RM6.60.
The research firm said SBC currently has five ongoing projects, with a cumulative gross development value (GDV) of RM6.2 billion over the next five to 10 years. It said the most high-profile of these projects is the Jesselton Quay project, a joint venture with listed port operator Suria Capital Holdings Bhd. The project, with a GDV of RM1.8 billion, is to be built on 6.5ha of prime port land on the waterfront of Kota Kinabalu. Approvals from the state government are pending before the launch of the first phase of commercial units.
According to CIMB, Jesselton Quay will house an international cruise terminal, a convention centre, hotels, retail outlets, and residential as well as office towers. Under the current arrangement, Suria Capital will receive 18% of the total project GDV (roughly RM324 million) from SBC. This translates into a land cost of RM460 per sq ft, which is deemed reasonable said CIMB. In the Klang Valley, SBC has a major project called Kiara East in Jalan Ipoh, Kuala Lumpur, with a GDV of RM1.5 billion.
The research outfit said SBC has maintained a low profile in Peninsular Malaysia as it has traditionally chosen to focus its developments in Sabah and Sarawak, particularly the Kota Kinabalu property market.
“However, given its rising number of property launches in the Klang Valley... we believe it is only a matter of time before investors grasp SBC’s potential,” said Foo in the report.
This article first appeared in The Edge Financial Daily, on April 7, 2014.
