UEM Land targets RM5b GDV in 2011

KUALA LUMPUR: UEM Land Holdings Bhd is planning to launch projects with a total gross development value (GDV) of RM5 billion this year, as it aspires to see its revenue grow by 50%.

With the acquisition of Sunrise Bhd, UEM Land is hoping to build its portfolio and surpass its competitors' revenue in the near future, said managing director and CEO Datuk Wan Abdullah Wan Ibrahim.

"With the acquisition of Sunrise, we are the biggest property player in terms of market capitalisation. But we do not have the earnings to prove it yet. However, we have enough projects in the pipeline to catch up," he said after the group's AGM on Thursday, June 16.

Wan Abdullah said UEM Land has set an internal target of 50% revenue growth for FY11 and a 10% return on investment (ROI).

Based on UEM Land and Sunrise's combined FY10 results, UEM Land's revenue is expected to grow to RM1.6 billion this year. Last year, UEM Land and Sunrise achieved revenue of RM469.7 million and RM590.7 million, respectively.

"While these are aspiration numbers, we think that they are achievable (with the combined revenues of UEM Land and Sunrise)," said Wan Abdullah.

Last year, UEM Land's revenue grew 15% to RM469.7 million. While it fell below the group's internal target of 20%, Wan Abdullah said it managed to achieve its sales target.

"The lower revenue was due to the fact that not all of the sales were recognised last year. Nonetheless, we managed to achieve ROI of 9.2% last year, which surpassed our 6% target," he said.

Wan Abdullah said UEM Land has total unbilled sales of RM1.5 billion, which will support earnings for the next two years.

Despite its large landbank in Iskandar Malaysia, Wan Abdullah said it would continue to scour for more land in the region.

"There are aspirations for UEM Land to grow regionally. With Sunrise onboard, we now have a project in Vancouver with RM1.2 billion GDV and 16ha of land in Durban, South Africa," said Wan Abdullah. However, he declined to mention the group's target locations.

UEM Land is the property arm of UEM Group, which has a 69.1% stake in the company as at April 29. UEM Group is wholly owned by Khazanah Nasional Bhd.

UEM Land is currently undertaking the development of Nusajaya, which is one of the five flagship zones of Iskandar Malaysia in Johor. Nusajaya spans a total of 23,875 acres (9,662ha), with UEM Land owning 10,403 acres under various stages of development.

Key developments there include the flagship 688-acre Puteri Harbour, Asia's first Legoland which is expected to open in 2012, and the RM1.3 billion coastal highway that links Nusajaya and Johor Bahru.

Outside of Nusajaya, UEM Land also has projects in Bangi, Cyberjaya, Kajang and Mont'Kiara.

"We are on track towards reaching our tipping point for Nusajaya next year, where it would become a true regional city," said Wan Abdullah.

UEM Land became the biggest property player by market capitalisation listed on Bursa Malaysia when it successfully acquired Sunrise earlier this year. Based on on Thursday's closing at RM2.77, UEM Land has a market capitalisation of RM11.5 billion. Its nearest counterpart, S P Setia Bhd, has a market capitalisation of RM7.44 billion.

Notwithstanding its size, UEM's historical price-to-earning (PER) multiple of 46 times is considered relatively high, and the stock trades at a price-to-book ratio of 2.9 times, compared with S P Setia's 1.9 times.

Nonetheless, analysts still see further upside to UEM Land's share price.

"Despite its premium valuation over its peers, we believe that the stock's potential inclusion in the FBM KLCI and positive news from Iskandar Malaysia will be its upward re-rating catalysts," said OSK Research in a recent note. It has a fair value of RM3.52 for UEM Land, 27% above the current share price.

For 1QFY11 ended March 31, UEM Land's net profit expanded to RM17.6 million from RM3.14 million a year earlier, due to direct development in Nusajaya and consolidated results of Sunrise. Revenue also surged to RM187.7 million from RM39.7 million a year ago.

UEM Land rose 15.4% in the last six months to a recent high of RM3.25 before closing at RM2.77 on Thursday.