KUALA LUMPUR: RHB Research is optimistic about UEM Sunrise Bhd's (UEMS) competitive position in the property development sector, citing its substantial landbank as a primary contributing factor.
The bank-backed research firm highlighted that UEMS's extensive land holdings offer flexibility, allowing the company to allocate parcels for targeted developments, including industrial projects, should favourable opportunities arise.
"As a major landowner in Iskandar Malaysia, UEMS has ample flexibility to develop its 7,632 acres of land there.
"Having huge parcels of land in Johor would simply mean that the company will be able to convert or re-zone some existing land it owns in remote areas for industrial developments without competing for and buying new land at current market prices," it said.
Out of UEMS' total land holdings of 7,632 acres in Johor, the majority of the company's land bank is situated in Gerbang Nusajaya (2,318 acres) near the Second Link Expressway close to Tuas Link and Fraser Metropolis in Kulai (2,500 acres).
The research firm believes that the entry of Nvidia and Microsoft could be a confidence booster among foreign investors, especially in the data centre space.
"Johor has also received investments from two Singapore-based data centre operators and facility providers, ST Telemedia Global Data Centres and Yu Ao.
"Some of the lands where their data centres will be set up were sold for record prices of RM120-RM125 per square foot (psf) based on the checks," it added.
Furthermore, RHB Research believes the correction in UEMS' share prices is an excellent opportunity for investors to re-enter positions to accumulate the stock.
"This inflow of investments may be just the beginning, and prime minister Datuk Seri Anwar Ibrahim's recent visit to the United States (US) should bear some fruit.
"According to media reports, Anwar met with the heads of some technology giants like Google, Enovix Corp, Microsoft and TikTok in San Francisco," RHB Research.
The research recommends a 'Buy' rating for UEMS and keeps its target price unchanged at RM1.18.