Sime Darby Property Bhd’s Elmina Business Park (EBP) continues to demonstrate strong sales momentum, rising land values and growing recurring income potential, reinforcing the township developer’s long-term growth prospects, according to CGS International.
Following a recent site visit to the industrial development, the research house maintained its “Add” recommendation on Sime Darby Property with an unchanged target price of RM1.85, citing resilient industrial demand, accelerating data centre investments and expanding recurring income streams.
CGS International said EBP, which spans 1,500 acres with an estimated gross development value (GDV) of RM9.9 billion, has already activated 47% of its total development potential through launched projects and land allocated for recurring income assets.
The research house expects the remaining GDV to be progressively unlocked over the next seven to 10 years, supported by Malaysia’s expanding manufacturing sector and growing digital economy.
Strong industrial demand fuels expansion
The report highlighted the strong demand for industrial properties, prompting Sime Darby Property to launch the second phase of Elmina Business Park (EBP2) in January 2026.
EBP2 comprises 350 acres of net developable land with an estimated RM2 billion GDV.
CGS International noted that industrial property values within the development have appreciated significantly since its launch.
According to management, prices for standard-built factories have more than doubled from RM2.8 million-RM2.9 million in 2019 to over RM6 million currently, while industrial land prices have risen from RM80-RM90 per square foot to more than RM200 per square foot.
Meanwhile, 19 industrial lots launched in EBP2 at RM135 per square foot—priced lower due to less mature infrastructure—have already achieved more than 80% take-up, reflecting continued demand from industrial occupiers.
Data centres to strengthen recurring income
CGS International said recurring income is expected to become an increasingly important earnings contributor for Sime Darby Property.
Management has reiterated its target for recurring income to account for 30% of group profit by FY2028, supported primarily by its expanding investment property portfolio.
The research house expects the key earnings driver to be the full-year contribution from Phase 1 and Phase 2 of the group’s built-to-lease data centres at Elmina Business Park, together with stable income from retail and industrial assets.
It estimates the two data centres could generate RM130 million to RM140 million in annual profit after tax, equivalent to around 18% to 19% of its FY2028 core earnings forecast.
Beyond the current projects, Sime Darby Property aims to more than double its assets under management (AUM) from RM4.4 billion currently to RM10 billion over the next three to five years.
The expansion is expected to be supported by additional investment assets, including the second phase of its data centre development, Metrohub 3 and Metrohub 4 industrial projects, a new shopping mall in Serenia City, and other recurring income assets.
CGS International also sees the group’s New Economy Venture (NEV) Fund as a medium-term catalyst. As the fund’s general partner and effective 50.01% equity owner, Sime Darby Property is expected to benefit from both fund earnings and recurring asset management fees.
Outlook maintained
The research house views Elmina Business Park as more than a conventional industrial township, describing it as a strategic asset capable of enhancing landbank value while improving the group’s earnings quality through recurring income.
CGS International expects Sime Darby Property to deliver a 12% earnings per share compound annual growth rate between FY2024 and FY2027, supported by its industrial developments, healthy balance sheet and attractive valuation.
It said key downside risks include wider losses from the Battersea Power Station project in the United Kingdom and slower-than-expected property launches, while stronger sales growth and further expansion of its data centre portfolio could serve as potential re-rating catalysts.
