KUALA LUMPUR: Kuala Lumpur Kepong Bhd's property arm KLK Land is expected to significantly contribute to the group's earnings in the next three years, according to Maybank Investment Bank Bhd (Maybank IB).
Maybank IB said this will be driven by the forthcoming retail mall in Bandar Seri Coalfields (BSC), which is anticipated to act as a catalyst for future project launches and sales.
It added that a revival of the Kuala Lumpur-Singapore high speed train (KL-Singapore HSR) may also catalyst its Johor property developments.
"There are recent talks of a potential revival of the KL-Singapore HSR. If it is revived based on the original alignment, KLK may be a beneficiary as one of the proposed stops is purportedly located next to its 500-acres Gerbang Nusajaya Development under Scope Energy SB.
"KLK Land has another similar joint venture (JV) setup in Kulai, a 2,500-acres Fraser Development, zoned for industrial and mixed development that could be launched if interest in Johor property market picks up," it said in a note today.
According to Maybank IB, over the past three years, KLK Land averaged RM182 million and RM59 million in yearly revenue and operating profits respectively from BSC alone, contributing to less than five per cent of KLK's group profits.
The bank said there is a few catalysts that can help propel KLK Land's contribution in the medium term.
"To us, the proposed new mall, targeted to open by end-2025, will complete the amenities offered at BSC for a sustainable township, and catalyst future developments there as BSC forms part of the 2670.9 hectares land earmarked for property development in that area," it noted.
Maybank IB said KLK's board has given the mandate to KLK Land to unlock the value of the group's existing landbank at the right time, prioritising margin over revenue growth.
This indicates that KLK Land is currently not expected to pursue standalone developments by acquiring external land parcels.
Maybank IB said KLK Land has sufficient projects to focus on.
The bank maintained a "Buy" call on KLK with an unchanged target price of RM23.90.