PETALING JAYA: UEM Land Holdings Bhd rose five sen to close at RM2.87 on Tuesday, June 28 on its appointment to oversee the development of parcels of land in Singapore, and projects in Iskandar Malaysia to be undertaken by joint-venture companies owned by Temasek Holdings Ltd and Khazanah Nasional Bhd.

The counter was the third most active on Bursa Malaysia on Tuesday, with 18.6 million shares traded.

Khazanah and Temasek on Monday announced the establishment of two JV companies to develop land in Singapore and Malaysia. M+S Pte Ltd, which is 60%-owned by Khazanah with the rest belonging to Temasek, will develop the land in Marina South and Ophir-Rochor. The projects in Singapore are estimated at S$11 billion (RM27 billion).

UEM Land and a subsidiary of Mapletree Investments Pte Ltd have been appointed to oversee the marketing and development of a project in Marina South. For the Ophir-Rochor project, UEM Land will work with a wholly-owned subsidiary of CapitaLand Ltd.

Credit-Suisse said, as the project manager, UEM Land's earnings could be boosted by the management fees. Using the benchmark 2% of gross development value (GDV) as the value of the fee, the research firm estimated that UEM Land could earn about RM540 million in revenue and RM365 million in net profit, which would translate into 17% of potential increase in the group's net profit for FY12.

"If we assume the management fees amount to 2% of the RM27 billion of GDV, this would translate into about RM540 million in revenue to be recognised over three-five years," the research house noted.

UEM Land is also slated to benefit from the increased participation of Temasek in the development of Iskandar Malaysia in South Johor, as it owns large tracts of land in the area.

Temasek, together with Khazanah, had also announced the development of two-wellness related projects in Nusajaya, Iskandar Malaysia with a total of 215 acres (87ha) and an estimated GDV of RM3 billion.

This development augurs well for the progress of Iskandar Malaysia as Temasek's involvement will create an "anchor tenant" effect to the corridor. According to RHB Research Institute, Temasek's presence will lead to other investors from Singapore to follow suit, which will determine the success of the development corridor.

"We believe UEM Land will benefit indirectly as the progress has shown greater confidence from the Singapore government, which should encourage more investments from other Singapore corporations to make Iskandar a success. Another booster will be the remaining 285 acres of the project," it noted.

Credit Suisse noted that Temasek's involvement in the development of Iskandar Malaysia and the progress made on the discussion between the Malaysian and Singaporean governments regarding the development of the land parcels in Singapore is one of the catalysts that the market has been waiting for.