Friday, October 26, 2012

Investors show approval for UEM Land deal

By Sharen Kaur
sharen@nstp.com.my
Published in NST on October 25, 2012

KUALA LUMPUR: UEM Land Holdings Bhd's shares rose 22 sen, or 11.4 per cent, to close the trading day at RM2.15 a share, as investors gave their seal of approval to its latest deal.

UEM Land had on Tuesday signed an agreement with Singapore's Ascendas Land International Pte Ltd to jointly develop a US$1.23 billion (RM3.76 billion) technology park project in Johor.

Analysts were generally upbeat on the project, which is part of the larger Gerbang Nusa development, that has an estimated gross development value of RM18 billion.

However, they are maintaining their earnings forecast and target price on the stock as the project will only be commencing at the end of 2013.


The 210-hectare project, located within the economic region of Iskandar, will cater to businesses in electronics, pharmaceuticals, medical devices, food processing and precision engineering.

The proposed development is expected to take place in three phases over nine years.

"Phase 1 will only start by end-2013. This means earnings will flow in much later, like in fiscal 2014 and onwards," said a property analyst at MIDF Research.

MIDF is maintaining its valuation on UEM Land, with a target price of RM2.46 and net profit earnings of RM340 million this year, and around RM380 million in fiscal 2013.

Hong Leong Investment Bank Research also maintained its "hold" rating on UEM Land, retaining its target price on the stock at RM2.04

An analyst from OSK Research said it may revise its target price and earnings forecast on UEM Land, once details on the project are more firm.

"Right now all the management is saying that the project will start by the end of next year. Anything could happen between now and then. Until things are more certain, we will maintain our earnings forecast on UEM Land," he said.

He added that the interest in UEM Land yesterday was probably because of its partner, Ascendas.

UEM Land Bhd, a wholly-owned subsidiary of UEM Land, will have a 40 per cent stake in the technology park project with Ascendas holding 60 per cent.

Ascendas, a developer and manager of industrial properties across Asia, is a unit of Jurong Town Corp, a Singapore government body.



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