Maybank Unmoved By UEM Sunrise Land Sale

On UEM Sunrise latest move to sell its non-core land to lower debt, Maybank IB said it is neutral on latest sale of its remaining 40% stake in AMSB (which owns 2,500 acres of land in Kulai) to KLK.

The group aims to use the sale proceeds to to lower its debt, the house maintains its earnings forecasts and TP unchanged at MYR1.00, based on 0.75x FY25E P/B while reiterating a sell call. For exposure in the property space, Maybank said it prefers SPSB MK and ECW MK instead.

UEMS has entered into a Share Sale Agreement (SSA) with KLK Land , 100%-owned by KL Kepong to dispose 100,000 ordinary shares and 353.6m RPS, representing its remaining 40% stake in Aura Muhibah S/B (AMSB; 40:60 owned by UEMS: KLKL) to KLKL for MYR386.2m. AMSB currently own 2,500 acres of agricultural land in Kulai and the MYR386.2m sales value represents MYR8.87psf pricing for the land. Post-disposal, AMSB will no longer be an associate company of UEMS.

The selling price is 6% above the previous divestment, where UEMS had disposed of a 20% stake in AMSB to KLKL in
Oct 2020 for MYR183m (or MYR8.38psf) but it is 27% lower than the MYR12psf that ECW had paid for a piece of land in Kulai in Sep 2023. This could be due to the larger land size compared to ECW’s 404 acres. The disposal aligns with UEMS’ strategy to strengthen its balance sheet by monetising non-core landbank and refocusing on its industrial projects in
Iskandar Puteri.

The disposal is expected to result in a net gain of MYR32m by 4Q24 while the house maintains it earnings forecasts pending sale completion. Post-disposal, UEMS’ net gearing will likely reduce to 0.41x, from 0.46x as at Mar 2024.

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