Sime Darby Property

[winston]

not vested

May 23, 2024

Sime Darby Property Berhad Industrial segment, the key growth area

We keep our FY24-26F EPS forecasts but raise our TP, now tagged to 0.8x FY25F P/BV, to RM1.25, translating to 35% discount to RNAV/share.

1QFY24 core net profit more than doubled yoy to RM131m on the back of 43% increase in revenue on strong progress billings.

New property sales came in at RM956m, driven by strong demand for its industrial products, which accounted for 30% of sales in the quarter.

TP: 1.25

Source: CIMB

https://rfs.cgsi.com/api/download?file= ... E91153A9BD

[winston]

not vested

Welike SIMEPROP (TP: RM1.98, ★★★★★) due to its strategic transformation under the SHIFT25 strategy, leading to diversification and expansion beyond property development.

This includes the significant milestone of closing the Industrial Development Fund 1 (IDF-1) at RM1bn, as well as the upcoming build-lease data centre at Elmina Business Park to boost recurring income.

SIMEPROP is also a leading player in Malaysia's industrial real estate sector, benefiting from the government's New Industrial Master Plan 2030 and increasing demand for industrial space, with a notable rise in industrial property sales.

Furthermore, the group’s strong execution capability has consistently met KPIs, as evidenced by a gross margin of 31% in 1Q24, a robust financial position with net gearing at 24%, and impressive progress towards surpassing its FY24 sales target of RM3.0bn.

We raise SIMEPROP’s TP to RM1.98 from RM1.57 previously. This new valuation, pegged at 1.2x CY25 BPS (previously 1.0x), aligns with the sector’s peak valuation during the last upcycle.

We also ascribe a 5% premium for SIMEPROP’s 5-star ESG rating. As Malaysia's largest developer by landbank, SIMEPROP demonstrates exceptional execution capability, agility, and flexibility in rolling out residential and industrial products that cater to evolving market needs.

Given these strengths, we firmly believe SIMEPROP is the prime proxy to capitalise on the current sector upcycle.

Source: TA

https://klse.i3investor.com/web/priceta ... arch/71912

[winston]

not vested

SDP sees minimal future impact from Battersea development rental yield guarantee

With the new building's occupancy rate starting at just 20 per cent, the accounting impact for 2024 has been notably large.

"However, we do not foresee any further impact because we have taken a prudent move to account for the major effects in the current quarter, and do not foresee substantial additional impacts for the remainder of the year”,

By aiming to increase the building's occupancy to a minimum of 50 per cent within the next 12 months -- and eventually to 80 per cent -- the company anticipates a reduction in the financial impact as the tenancy improves.

SDP’s net profit surged 127.9 per cent to RM161.96 million in the second quarter ended June 30, 2024 (2Q 2024) from RM71.07 million in 2Q 2023, while revenue soared 74.2 per cent to RM1.20 billion from RM688.92 million previously.

Previously, it was reported three Malaysian entities - the Employees Provident Fund (EPF), SDP and SP Setia are likely to shoulder losses of some RM250 million a quarter or RM1 billion a year from a five-year rental guarantee at the iconic Battersea development in London.

SDP and SP Setia Bhd each have 40 per cent in the venture, while the EPF has 20 per cent.

Source: Bernama

https://www.thestar.com.my/business/bus ... -guarantee

[winston]

not vested

Exceeding expectations once more

Profit and sales above expectations; U/G to BUY

SDPR's 3Q24 core net profit of MYR133m (-11% YoY, -16% QoQ) was 5% above our and consensus estimates for the quarter.

9M24 locked-in property sales of MYR3.2b were also above our and management expectations.

We raise FY24-26E earnings forecasts by +8% to +31% and TP to MYR1.66 on a higher 1.2x FY25E P/B peg (peak valuation since de-merger).

The higher P/B peg (previously 1.0x) is due to improved fundamentals.

Catalysts include more data center deals in its Elmina Business Park project. U/G to BUY.

Source: Maybank

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://mkefactsettd.maybank-ke.com/PDFS/420448.pdf

[winston]

Another deal from Google

Building another data center in Elmina Business Park

We are positive on SDPR’s ability to secure another build-then-lease data center (DC) deal with Google.

The DC, supported by a 20-year lease agreement, will generate steady recurring income and support SDPR’s SHIFT 25 Strategy.

Capex for constructing the DC will be funded by SDPR’s strong balance sheet (0.19x net gearing).

We maintain our FY24-26 earnings forecasts and MYR1.66 TP (on 1.2x FY26E P/B peg). BUY.

Source: Maybank

chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://mkefactsettd.maybank-ke.com/PDFS/424238.pdf

[winston]

not vested

Property portfolio, data centres to lift SimeProp

A number of income streams for SimeProp, including the recent acquisition of two double-storey logistics warehouses in Bandar Bukit Raja in Selangor that cost RM232mil.

KLGCC Mall in Kuala Lumpur is set to open to the public in the second half of this year.

The property developer’s commencement of built-to-lease data centres at Elmina Business Park in Selangor is also set to boost recurring income from next year (FY26) onwards.

Phase one and two of the data centre assets are on track for completion by end-FY26 and 1H27, respectively.

Expects SimeProp to be negatively affected by the 6% sales and service tax (SST) on construction services, as it directly leads to higher construction costs for its commercial and industrial products.

We do not rule out the risk of softer sales in its commercial and industrial segments as elevated property prices may temper buyer sentiment.

Following a weaker 1Q25 for SimeProp, it now continues to anticipate stronger quarterly earnings for the group for the rest of FY25 as progress billings pick up pace.

“The valuation has also reverted to a palatable FY26 price-earnings of 15 times, which we deem compelling given the encouraging FY25 to FY27 earnings growth trajectory,” it said.

The research house added downside risks include wider losses from the Battersea Power Station development in Britain and slower property launches, while re-rating catalysts were stronger sales growth and further expansion of SimeProp’s data centre business.

Source: The Star

https://www.thestar.com.my/business/bus ... t-simeprop

[winston]

not vested

Joint effort to unlock Carey Island’s potential

Unlocking Carey Island’s potential

We are positive on SDPR’s latest collaboration with SDG in Carey Island, given its strategic location and future potential.

The 2,000 acres of land, which will be developed into an industrial and logistics hub, should benefit from the existing Northport and Westport, as well as the upcoming new mega-port in Carey Island.

We maintain our earnings forecasts and MYR1.50 TP (on an unchanged 0.6x P/RNAV) pending further information on the proposed JV.

Reiterate HOLD.

Source: Maybank

https://mkefactsettd.maybank-ke.com/PDFS/466208.pdf