HSL (BUY)
Samariang land bank coup
Entered into a S&P Agreement with Projek Bandar Samariang for the
purchase of a 275.5 acre land in Kuching’s northern township of Samariang
for a total cash consideration of RM25.5m, equivalent to ~RM2.10/sq ft. The
latest acquisition will enlarge HSL’s existing land bank to a total of 890
acres.
We belief that it will do well due to the positive spill over effect
from Samariang Aman. The latest land deal will ensure continuity in HSL’s
property launches in Samariang area.
GDV is estimated to be worth ~RM700m and the development is expected to
commence in 2013 and will span over a development period of 6 to 8 years.
The acquisition price of ~RM2.10/sq ft looks attractive compared to the
market price of ~RM5/sq ft for the area. Overall, land cost-to-GDV ratio is
~3.6%, hence increasing the development’s feasibility and success rate as well
as profitability.
By assuming a 10% discount rate over 7-years and 25% net profit margin,
Samariang Aman 3 will translate to 16 sen/share for HSL.
Forecasts remain unchanged, hence maintain TP of RM2.21 based on
12x average FY12 and FY12 earnings.
Source: HLIB Research 7 March 2012
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