Wednesday, November 9, 2011

UEM Land up on RM1.3b Angkasa Raya project

KUALA LUMPUR (Nov 9): Shares of UEM Land Bhd to a high of RM2.16 on Wednesday as buying interest perked up on its unit, SUNRISE BHD []'s plan for a RM1.3 billion'' landmark project, Angkasa Raya.

At 11.22am, it was up three sen to RM2.14. There were 4.04 million shares done at prices ranging from RM2.12 to RM2.16.

On Tuesday, Sunrise unveiled plans for the project which has an estimated gross development value of RM1.3 billion and is poised to be the group's new flagship developed. The building will be on the 1.59 acre site of the former Wisma Angkasa Raya, which was demolished in August.

Comment: The 29-year-old Wisma Angkasa Raya, Kuala Lumpur's first high-rise office building, was demolished in August 2011.

UOB Kay Hian Research said in June 2008, Sunrise paid RM179 million for the 69,171 sq ft Angkasa Raya parcel, or a land cost of about RM2,588 psf.

'Assuming a plot ratio of 10 times, the land cost per plot ratio works out to be RM259 psf. Adding RM600 psf for the CONSTRUCTION [] of an up-market development and factoring in an efficiency ratio of 80%, the total construction cost is about RM1,100 psf per net saleable area.

'We reckon UEM Land could garner a decent margin of 18-36%, assuming a conservative ASP of RM1,300 to RM1,500psf,' it said.

UOB Kay Hian said the project would add about 2.0 sen to our fully-diluted RNAV/share.

It maintained its earnings forecasts for now. A back-of-the-envelope calculation showed that the development could add RM30m to UEM Land's bottom line in FY13-17, or about 9% of its FY12 net profit, it added

'We maintain our BUY call with a target price of RM2.68 (25% discount to RNAV/share of RM3.57). This new valuation takes into account of the lingering uncertainty of the property market as well as the gloomy outlook of the macro picture,' it said.

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