GAMUDA is acquiring 100% equity interest in Tam Luck Real Estate Corporation which solely owns a 9.1 acres mixed-use plot of land in a prime location of Thu Duc City, Ho Chi Minh City (HCMC) in Vietnam for VND7.30b (RM1.49b).
The project land is a shovel-ready mixed-use high-rise project site with all requisite planning approvals obtained that is ready for immediate development, said Kenanga Research (Kenanga) in the recent Company Update Report.
“The land acquisition is expected to be completed by 3QCY23. We are positive over the acquisition that will expand GAMUDA’s presence in Vietnam,” said Kenanga.
This is part of its expansion plan in Vietnam as well as being a part of its quick-turnaround-project strategy, which focuses on generating a continuous pipeline of high IRR assets with an investment horizon of within five years.
The project is located in Thu Duc City, a newly formed secondary city within the Greater HCMC, which is just 6.5km from the existing Central Business District (CBD) with direct access to highways that connect HCMC and Hanoi, and HCMC to major industrial zones.
In addition, Metro Line 1, when completed in 4QCY23, will connect the project directly to the existing CBD. More importantly, the site is situated next to Thu Thiem (the new CBD) and thus the project is targeted at the high-end category with selling price ranging USD4,000 to USD7,000 per square metre.
“The purchase price for the project land of VND7.2bn was slightly lower than the market value of VND7.3bn as assessed by Cushman & Wakefield in May,” said RHB Research in the recent Malaysia Company Update Report, adding that GAMUDA’s overall landbank post acquisition would be 3.9k acres, amounting to more than RM60b in GDV.
The construction permit of the project, with GDV of USD1.1b (RM5.1b), has been approved for the development of:
(i) 1,968 exclusive apartments.
(ii) 23 penthouses.
(iii) 51 podium shop.
(iv) 21 shophouses.
Kenanga continue to like GAMUDA for:
(i) It being the front-runner for the tunnelling job for MRT3.
(ii) Its job wins in Australia and Singapore speaks eloquently for its competitiveness in the international market.
(iii) Its strong balance sheet after the disposal of its toll highways.
(iv) Its strong earnings visibility underpinned by a robust outstanding order
book of RM21.5b.
(v) Its efforts to expedite growth in the renewable energy space in line with global sustainability goals.
Kenanga maintains its target price of RM5.15. Risks to their call include governments cutting back on public infrastructure spending, delays in the roll-out of key public infrastructure projects in Malaysia such as MRT3, and delays in private funding initiative projects due to funding/environmental issues.
