RHB Investment Bank Bhd (RHB Research) has maintained its BUY call on Eastern & Oriental Bhd (E&O) while raising its target price to RM1.08 from RM1.05, implying 44% upside and around 3% FY27F dividend yield, after the property developer secured new land in Kuala Lumpur’s Jalan Kia Peng through a joint venture.
RHB Research said the 1.4-acre freehold site, acquired for RM189.9 million by a joint venture between E&O and Majestic Gen, strengthens the group’s premium property presence in the KLCC area as its Conlay and The Peak projects are almost fully sold.
The land carries a cost of RM3,106 per square foot, which the research house considers attractive compared with recent KLCC-area transactions. RHB Research noted EXSIM Development paid about RM6,000 per square foot for a site next to W Hotel KL while Mah Sing paid RM4,019 per square foot for the Corus Hotel site.
According to RHB Research, the site could support a high-end residential project with an estimated gross development value of RM1.1 billion based on a 10-times plot ratio and an average selling price of at least RM2,200 per square foot, although the launch is likely one to two years away.
The research house also said growing demand from foreign buyers and wealthy Malaysians could support the high-end segment, while any disposal of E&O’s commercial land at Andaman Island could provide a major share price catalyst.
RHB Research raised its target price after incorporating the acquisition into its revised RNAV estimate.
As of 10.39 am, the stock price is flat at RM0.75.
