China Developer Greenland Group Enters Iskandar Malaysia
• Greenland Group signed an agreement with Iskandar Waterfront Holdings (IWH) to buy 14 acres of land for RM600 million with plans to develop projects with a potential gross development value (GDV) of RM2.2 billion. The Shanghai-based firm is understood to be eyeing more transactions with gross development value in excess of RM10 billion in Danga Bay.
• Inclusive of the Greenland transaction, IWH has to-date inked 17 deals with local and foreign partners to develop properties worth RM127 billion in GDV, providing a stimulus to its ambitious plan of transforming the coastline of Johor bordering Singapore into a waterfront metropolis.
• The transaction comes amidst an environment where property developers are seeing weak response from buyers for their launches in Johor. The latest to feel the heat was Singapore’s Pacific Star Development that saw only 25 percent bookings in the second phase of its condominium project in Puteri Harbour, Iskandar Malaysia.
Significance: Maybank IB Research had recently expressed concerns over Iskandar Malaysia’s medium-term prospects saying the massive influx of residential and retail properties in hotspots like Danga Bay and Nusajaya could be harmful to asset values.
AmResearch Maintains “Buy” Call On DRB-Hicom, Target Price RM3.60
• DRB-Hicom’s subsidiary DRB-Hicom Defence Technologies (DHDT) is aiming to deliver 12 8×8 armoured-whelled vehicles (AV8) to the Malaysian military by year-end.
• “Out of the 257 vehicles scheduled to be delivered by 2018, two variants – IFV 25 and AFV 30 – would start production in June,” says DHDT chief executive officer Amril Samsudin. “The AV8s are currently only for the Malaysian military, but we will not discount the possibility of the vehicles being marketed overseas.”
• DHDT had supplied nine armoured vehicles to Timor Leste’s armed forces last year, and is in discussions with Cambodia and Myanmar on maintenance, repair and overhaul contracts.
Significance: While the news flow was positive, AmResearch believed it is also important for another of DRB-Hicom’s subsidiary, Proton, to ramp up launches of new models. The research house maintains its valuation and reiterates its “Buy” call on DRB-Hicom with a target price of RM3.60 per share.
RHB Research Downgrades Padini To “Neutral” Rating, Target Price RM2.15
• RHB Research views that Padini Holdings’ earnings growth was gaining momentum from its aggressive outlet expansion and the group is expected to perform better in 2014 and 2015.
• Padini is on track to add three Padini Concept Stores and four Brands Outlet (BO) stores in 2014 and it may open an additional BO outlet at Aeon’s Bukit Mertajam shopping mall this year. RHB Research is positive on these series of store openings to lift Padini’s future sales and earnings.
• In response to changing consumer spending patterns, the group will focus on expanding its BO stores by targeting the lower end spectrum of the retail market. Its closest peer, the Factory Outlet Store, has 55 stores nationwide versus BO’s 23 stores.
Significance: RHB Research downgrades Padini to “Neutral” from “Buy” previously with a new target price of RM2.15 on the back of weak FY13 numbers with only one BO store opening in the last financial year and lower average selling prices due to aggressive bundling promotions and discounts.
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Stocks In Focus MY (Iskandar Malaysia, DRB-Hicom, Padini Hldgs) – 17/04/14
