Hong Leong Investment Bank Bhd (HLIB) maintained its BUY call on Sime Darby Property Bhd (SDP) with an unchanged target price of RM2.10 after the developer announced the RM160 million acquisition of Wisma Unirazak for redevelopment.
HLIB said the acquisition was positive as the 1.46-acre freehold site along Jalan Tun Razak could be redeveloped into a premium high-rise serviced apartment project with supporting commercial components, carrying an estimated gross development value (GDV) of RM900 million.
The research house said the acquisition provides SDP with exposure to a strategically located asset near the Ampang Park LRT and MRT interchange, with connectivity to key commercial hubs including KLCC and Tun Razak Exchange (TRX).
SDP plans to redevelop the existing 15-storey office building, subject to approvals, with existing tenancies expected to end by 31 October 2027. The project is targeted for launch in 2028 and is expected to be completed within five years.
HLIB noted that the implied land cost-to-GDV ratio stands at 17.8%, which is lower than Paramount’s nearby Jalan U-Thant acquisition at 23.4%. The research house added that the project could see further upside if SDP secures approval for a higher plot ratio under the Kuala Lumpur Local Plan 2040.
The research house said SDP’s targeted selling price of above RM2,000 per square foot places the development at the premium end of the market, but added that the company’s track record in delivering high-end residential projects could support demand.
As of 11.31 am, the stock price slips 0.72% to RM1.37.
