The southern appeal
INVESTORS who held on to their shares in UEM World Bhd for years in the fervent belief that the tide would eventually turn for the group have been vindicated.
In fact, it would hardly be considered a stretch to say that the stock has taken on a life of its own over the last few weeks. Assuming an investor had bought the shares at the start of the year, he would have made a tidy gain of more than 130%.
UEM is said to be well-positioned to benefit from the anticipated appreciation in Johor land values
This, in part, could be based on the fact that several research houses have come out with reports to highlight the company's encouraging prospects given the government's push to develop the Iskandar Development Region (IDR) into a major economic powerhouse. (UEM World owns about 10,000 acres of land in Bandar Nusajaya, which is an integral component of the IDR.)
UOB-Kay Hian Research reckons the IDR has all the makings of the next super-cycle performer on Bursa Malaysia.
“(The IDR) is a strong super-cycle performer candidate because it is a new investment theme, the government is involved, policy changes are likely to take place and mega infrastructure contracts that have been budgeted under the Ninth Malaysia Plan (9MP) are likely to be awarded,” it says.
Recent land deals in the state have also served to highlight the potential value of the vast tract of land owned by UEM World in Nusajaya, Johor.
The sale of commercial land in Nusajaya by SP Setia Bhd was transacted at RM65 per sq ft. UEM Land, a wholly owned unit of UEM World, managed to sell five parcels of industrial land to Singapore's HG Metal Manufacturing Ltd at RM21psf.
This has given rise to hope that UEM World's land in the vicinity could be worth a lot more than what industry observers initially reckoned it would fetch.
Some observers now say they would not be surprised if more foreign investors make a beeline for land in Johor. They say the stark price differential between Malaysia and Singapore for residential, commercial and industrial land would make foreigners willing to fork out anywhere between RM20 and RM30 psf for land in Johor.
Re-rating catalysts
UOB-Kay Hian says it is likely that companies owning land in the state, like UEM World, Tebrau Teguh Bhd and Mulpha International Bhd, would see their revised net asset values (RNAV) rise over the next few years as land values appreciate more on the back of policy changes.
“For UEM World, if land prices increase to RM20 psf (or equal to Klang-Shah Alam levels), its RNAV could rise to RM8.35,” UOB-Kay Hian points out.
A foreign investment research house has come up with a RNAV-based target price of RM5 for UEM World shares. Based on last Thursday's closing price of RM4.08, this means the shares could still enjoy an upside of more than 20%.
The valuation is based on RNAV as the bulk of UEM World's worth is derived from its undeveloped land bank. In Johor, the group has about 10,000 acres of undeveloped land, making UEM World one of the largest owners of land in the IDR.
The foreign research house notes in a report dated Feb 6 that UEM World is well positioned to benefit from the anticipated appreciation in Johor land values. It reckons that every RM1 psf rise in land value would boost the investment bank's RNAV for UEM World by 5%.
“The Government’s focus on developing southern Johor and possible capital management initiatives at group level are conducive factors to drive the potential re-rating of UEM World. We believe the catalysts will come from appreciating land values in Johor and potential capital management initiatives as UEM World may look to dispose of some of its non-core assets,” it says.
It is unlikely that UEM World would distribute cash given that it requires capital for the development of Nusajaya. However, the foreign house says it is possible that the company would make a distribution in specie of its holdings in some of its non-core assets like Cement Industries of Malaysia Bhd and Pharmaniaga Bhd.
This level of optimism among analysts about UEM World is fairly new. This time last year, the group still had its work cut out to convince analysts that it is truly positioned for growth.
Many had come away from a media/analyst briefing not altogether convinced that Nusajaya would take off in as big a way as had been suggested by UEM World chief Datuk Ahmad Pardas Senin.
Since then, however, the development of the Southern Corridor has received the government's endorsement.
It is now one of the major plans that would determine the overall success of the 9MP.
UEM World's investment case has also been enhanced by measures taken to address its debt burden. Last October, the group unveiled a plan to raise RM1.94bil via a de-gearing exercise. This involves the sale of land to Khazanah Nasional Bhd.
The plan would simultaneously help UEM World raise financing to accelerate the development of Nusajaya and get Khazanah actively involved in the development of key projects in the vicinity of the group’s existing land bank.
Tuesday, January 16, 2007
The URA has received two bids for the 99-year leasehold hotel site at Sinaran Drive.
The URA has received two bids for the 99-year leasehold hotel site at Sinaran Drive.
The top bidder, Glory Realty, offered S$131.1 million or S$501 per square foot per plot ratio.
According to property agents CB Richard Ellis, this was close to the highest bid placed by Republic Hotels & Resorts Limited for a hotel site at Mohamed Sultan Road last year.
Meanwhile, CBRE Research said that in view of the location, the top bid received was an indication of the buoyant interest in the hotel market.
With its proximity to Thomson Medical Centre and Tan Tock Seng Hospital, the site is seen as suitable for a hotel catering to the growing medical tourist market.
Source: Channel NewsAsia, 16 January 2007
The top bidder, Glory Realty, offered S$131.1 million or S$501 per square foot per plot ratio.
According to property agents CB Richard Ellis, this was close to the highest bid placed by Republic Hotels & Resorts Limited for a hotel site at Mohamed Sultan Road last year.
Meanwhile, CBRE Research said that in view of the location, the top bid received was an indication of the buoyant interest in the hotel market.
With its proximity to Thomson Medical Centre and Tan Tock Seng Hospital, the site is seen as suitable for a hotel catering to the growing medical tourist market.
Source: Channel NewsAsia, 16 January 2007
Tuesday, January 2, 2007
Jurong Reptile Park put on the block again
Fourth floor of Heartland Mall also up for auction next week
Business Times
By KALPANA RASHIWALA
JURONG Reptile Park is back on the auction block, this time as a liquidator’s sale. Also in the line-up for DTZ Debenham Tie Leung’s auction on March 29 is the fourth floor of Heartland Mall near Kovan MRT Station.
The strongest contender for Heartland Mall’s fourth level would be a Lend Lease managed fund-Guthrie tie-up.
DTZ said the indicative price for Jurong Reptile Park - which is on a 206,304 sq ft site with a remaining lease of about nine years - is about $2 million to $2.2 million. The attraction, formerly known as Jurong Crocodile Paradise, is a two-storey property.
Jurong Bird Park, which is understood to have been interested in the property when it went under the hammer five years ago, could be interested again, say market watchers.
After all, the two parks are just a stone’s throw away from each other, and even share a car park, allowing Jurong Bird Park to tap synergies from the two properties.
The site is zoned for ‘Sports & Recreation’ use, according to DTZ. The property is being put up for sale by liquidator Stone Forest Corporate Advisory Pte Ltd. It was formerly owned by ‘Geylang King’ Eric Tan, before mortgagee United Overseas Bank took over the asset. UOB tried in vain to sell the property during a 2002 auction.
The park was once famous for its crocodiles, but today the only reptiles there are some iguanas and snakes. Existing tenants - which include a KTV lounge, eateries and a beer garden - pay a total rental of almost $27,000 a month, not much more than the monthly ground rent of about $20,000 payable to JTC Corp.
‘Clearly, potential bidders will be looking at a major revamp, to make their investment profitable,’ says DTZ auctioneer and director Shaun Poh.
Over in Hougang, the strongest contender for Heartland Mall’s fourth level, market watchers reckon, would be the tie-up between a Lend Lease managed fund and Guthrie that owns the lower three floors of the mall, which stands on a site with a remaining lease of 76 years.
The fourth level space is being sold by owner Wang Lei Investment, understood to be linked to the company that owns karaoke chain Kbox.
The space comprises six units adding up to 21,131 sq ft of lettable area. Five of the units are currently leased to private schools. The sixth is vacant.
Wang Lei bought the six units for $6.8 million from mortgagee Maybank last year. It is understood to have upped rents of the tenants and extended their leases to August 2012. The monthly rental collection for the five leased units is about $67,200. The properties are being sold with existing tenancies.
The $9.5-9.8 million asking price reflects a property yield of about 7.4-7.6 per cent.
DTZ’s auction will begin at 2.30 pm next Thursday at Amara Hotel.
Meanwhile, the former factory building of Asia Pulp & Paper at 118, Pioneer Road was withdrawn from a Knight Frank auction yesterday after the company settled outstanding property tax owed to the Inland Revenue Authority of Singapore.
Business Times
By KALPANA RASHIWALA
JURONG Reptile Park is back on the auction block, this time as a liquidator’s sale. Also in the line-up for DTZ Debenham Tie Leung’s auction on March 29 is the fourth floor of Heartland Mall near Kovan MRT Station.
The strongest contender for Heartland Mall’s fourth level would be a Lend Lease managed fund-Guthrie tie-up.
DTZ said the indicative price for Jurong Reptile Park - which is on a 206,304 sq ft site with a remaining lease of about nine years - is about $2 million to $2.2 million. The attraction, formerly known as Jurong Crocodile Paradise, is a two-storey property.
Jurong Bird Park, which is understood to have been interested in the property when it went under the hammer five years ago, could be interested again, say market watchers.
After all, the two parks are just a stone’s throw away from each other, and even share a car park, allowing Jurong Bird Park to tap synergies from the two properties.
The site is zoned for ‘Sports & Recreation’ use, according to DTZ. The property is being put up for sale by liquidator Stone Forest Corporate Advisory Pte Ltd. It was formerly owned by ‘Geylang King’ Eric Tan, before mortgagee United Overseas Bank took over the asset. UOB tried in vain to sell the property during a 2002 auction.
The park was once famous for its crocodiles, but today the only reptiles there are some iguanas and snakes. Existing tenants - which include a KTV lounge, eateries and a beer garden - pay a total rental of almost $27,000 a month, not much more than the monthly ground rent of about $20,000 payable to JTC Corp.
‘Clearly, potential bidders will be looking at a major revamp, to make their investment profitable,’ says DTZ auctioneer and director Shaun Poh.
Over in Hougang, the strongest contender for Heartland Mall’s fourth level, market watchers reckon, would be the tie-up between a Lend Lease managed fund and Guthrie that owns the lower three floors of the mall, which stands on a site with a remaining lease of 76 years.
The fourth level space is being sold by owner Wang Lei Investment, understood to be linked to the company that owns karaoke chain Kbox.
The space comprises six units adding up to 21,131 sq ft of lettable area. Five of the units are currently leased to private schools. The sixth is vacant.
Wang Lei bought the six units for $6.8 million from mortgagee Maybank last year. It is understood to have upped rents of the tenants and extended their leases to August 2012. The monthly rental collection for the five leased units is about $67,200. The properties are being sold with existing tenancies.
The $9.5-9.8 million asking price reflects a property yield of about 7.4-7.6 per cent.
DTZ’s auction will begin at 2.30 pm next Thursday at Amara Hotel.
Meanwhile, the former factory building of Asia Pulp & Paper at 118, Pioneer Road was withdrawn from a Knight Frank auction yesterday after the company settled outstanding property tax owed to the Inland Revenue Authority of Singapore.
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