RHB Research has maintained its BUY call on AME Elite Consortium Bhd and raised its target price to RM2.33 from RM2.30, citing the group’s latest Johor land acquisition as a strategic move that could support medium- to long-term industrial property demand.
The new target price implies 76% upside and an estimated FY2027 dividend yield of about 5%.
RHB said it views positively AME’s proposed acquisition of 176.45 acres of freehold agricultural land in Jeram Batu, Pontian, Johor, for RM199.8 million.
The land is being acquired from Hak Soon Seng Plantation (M), a Singaporean-owned oil palm planter in Malaysia, through several sale and purchase agreements.
RHB estimates the site could potentially support a development with a gross development value of about RM1.3 billion
Positioned To Benefit From JS-SEZ
The research house said the land is strategically located to capture demand arising from the Johor-Singapore Special Economic Zone, while also potentially benefiting from continued shifts in supply chains linked to prolonged US-China trade tensions.
The purchase consideration translates into a land cost of about RM26 per sq ft, which RHB considers reasonable given the rise in land prices across Iskandar Malaysia.
It attributed the appreciation in land values to infrastructure development, stronger foreign direct investment and rapid growth in data centre activity.
The land is located along Jalan Ulu Pulai, which connects Jalan Gelang Patah with Ulu Choh and Pekan Nanas, and is approximately 9km from the Malaysia-Singapore Second Link Expressway and 26km from Singapore’s Tuas Checkpoint.
It is also adjacent to Setia Business Park.
Likely To Become Another i-Park Development
RHB expects the acquisition to replenish AME’s depleting Johor landbank and said the site could likely be developed into another i-Park industrial development.
Upon completion of the acquisition, expected in the first half of 2027, AME’s remaining landbank could increase to almost 500 acres, with more than 40% located in Iskandar Malaysia.
RHB said the enlarged landbank would strengthen the group’s ability to capture industrial property demand tied to manufacturing, logistics and other investment activity in southern Johor.
The acquisition is subject to several conditions precedent, including approval from the Estate Land Board and the removal of existing structures on the property, excluding power distribution infrastructure.
Funded Entirely Internally
AME intends to fund the RM199.8 million purchase entirely through internal funds.
RHB noted that the group had a cash balance of RM760.5 million and net cash of RM131 million, giving it sufficient financial capacity to undertake the acquisition without relying on external financing.
The research house made no changes to its earnings forecasts, as the new land is not expected to contribute materially until FY2028 due to the time required for land conversion, earthworks and development preparation.
Higher TP, But Bigger RNAV Discount
While RHB is more positive on AME’s longer-term growth potential following the acquisition, it has adopted a more conservative valuation assumption.
Its revised RM2.33 target price is based on a 35% discount to revised net asset value, compared with a 30% discount previously.
RHB said the larger discount reflects heightened geopolitical uncertainty in the Middle East as well as uncertainty surrounding Malaysia’s domestic political landscape.
Nevertheless, it remains constructive on AME’s prospects, supported by its industrial property exposure, landbank expansion and potential demand spillovers from the Johor-Singapore Special Economic Zone.
