KUALA LUMPUR: KIMLUN Corporation Bhd's joint venture (JVco) with Astaka Holdings Bhd to develop a serviced apartment near the Johor Bahru-Singapore Rapid Transit System (RTS) Link is set to raise its total orderbook to RM3.5 billion.
Hong Leong Investment Bank Bhd (HLIB Research) said under the arrangement, Kimlun will fork out RM490,000 to subscribe to the 49 per cent stake in the JVCo.
Upon which, the JVCo will acquire the 1.66 hectares, Astaka Padu Sdn Bhd, and Seaview Holdings Sdn Bhd for RM61.5 million.
JVCo will fund the land acquisition through borrowings, shareholder loans, or capital injections proportionate to the equity interest in JVCo.
"Through this, the company could secure a construction contract worth RM300 million, lifting the total orderbook to RM3.5 billion and also recognising 49 per cent of development profits.
"Land cost to gross development value (GDV) ratio of 10 per cent could provide adequate safety margin while its prime location is reassuring," it said in a note.
Kimlun announced that it is forming a JVCo in partnership with Astaka Holdings to develop a RM600 million GDV-serviced apartment located near the CIQ and JB-SG RTS Link.
The development, known as Arden@One Bukit Senyum is essentially Phase 3 of Astaka Holdings' flagship development, One Bukit Senyum in Johor. Arden carries a GDV of RM600 million and will comprise 600 units of premium serviced residences.
The project is slated to launch in the fourth quarter of 2024, with construction expected to be completed within 48 months.
"At a land purchase price of RM61.5 million, this translates to a low land-to-GDV ratio of ~10 per cent which does provide buffers. We also gather that other condominium complexes in the vicinity are selling at a similar range of RM1–1,400 per square foot," it added.
The firm maintained a "buy" call on the stock with a target price of RM1.72.