KUALA LUMPUR: Hong Leong Investment Bank Bhd (HLIB Research) views Lagenda Properties Bhd's new township development in Bernam Jaya, Selangor, as an attractive development opportunity for the company.
The bank-backed research firm noted that the state government selected Lagenda Properties as the project developer following a competitive selection process.
HLIB Research deemed the acquisition price to be attractive as it was lower than Lagenda Properties' historical land cost to gross development value (GDV) of 8-10 per cent.
"The land is already residential land as there is no need for additional conversion costs and faster time to market, and the location within Selangor should fetch a premium compared to other states given the proximity to the city centre.
"In addition, Lagenda Properties will also be able to preserve its cash outlay as the payments are in tranches while the first payment will only be made around the time of the development commencement," it said in a note.
Lagenda Properties, on September 6, signed a partnership with Kumpulan Hartanah Selangor Bhd (KHSB), a wholly-owned subsidiary of the Selangor state government, to jointly develop a 191 acres of land located in Bernam Jaya, Selangor, into a new affordable township.
The new township is located about 75km from the Kuala Lumpur city centre and is accessible via the North-South Expressway.
Lagenda Properties targeted its first launch from the township by the fourth quarter (Q4) of 2023, and the estimated GDV of the project is RM550 million, with less than 2,000 units of landed homes priced below RM250,000.
"Taking into account the recent Perak land acquisition in August (RM92.4 million) and this development (RM42 million), Lagenda Properties' net gearing will increase to 0.16 times from 0.04 times as of June 30, 2022.
"Pending further clarity on this development, we make no changes to our forecasts," it said.
The firm maintained a 'Buy' on the stock with a target price of RM1.61.