KUALA LUMPUR: Sunway Bhd is expected to capitalise on the data centre (DC) boom trend through its sale of Johor land to the Singaporean firm Equalbase.
Hong Leong Investment Bank Bhd (HLIB Research) said Sunway can seize the opportunity to monetise its landbank at a very attractive price.
"As seen from the recent surge in land transactions in the DC space, the current DC boom is providing property developers that have landbank suitable for DC development a new monetisation avenue," it said in a note.
Sunway had announced that it is selling land measuring 25.9 hectares from its Sunway City Iskandar Puteri (SCIP) township in Johor for DC development to Equalbase for a sales proceeds of RM380 million.
The land sale translates to a selling price of RM136 per square foot (psf), which sits at the upper end of recent land sale deals in Johor, ranging from RM75 to RM138 psf.
HLIB Research believes that the attractive pricing that Sunway was able to fetch is due to its strategic location, given its close proximity to Singapore, which ensures low latency.
(minimal delay in data transmission).
This includes better cross border collaboration and synergy for businesses operating in both regions, as well as well-developed infrastructure, including roads, power supply, and telecommunication.
The firm also noted that it will take roughly a year for Sunway to complete the transaction.
"Assuming a gross profit margin of 74 per cent, this should give an attractive estimated net land sale gain of RM213.1 million, which makes up around 28.9 per cent of our financial year 2025 (FY25) forecast," it added.
HLIB Research has maintained a "buy" call on Sunway, with an unchanged target price of RM4.30.
The firm has kept its forecasts at the moment pending more details and the completion of the transaction.
"The group's prospects remain bright, anchored by three main growth pillars, namely healthcare, property development, and construction.
"With the group's widening exposure to the Malaysian economy, investing in the stock is tantamount to owning a piece of the domestic economy, which is on the cusp of entering a new phase of growth," it noted.