KUALA LUMPUR: RHB Research has raised the gross development value (GDV) for AME Elite Consortium Bhd's remaining 160 acre in i-TechValley by 10 per cent to RM1.17 billion, on the strength of recently transacted industrial land prices near the project.
It said in a note today that the potential addition of new land, especially in Johor, could be a share price catalyst as AME has been anchoring the industrial sector in Iskandar Malaysia.
It has a war chest of about RM180 million post listing of AME Real Estate Investment Trust.
The research firm has raised its target price for AME to RM2 from RM1.82 previously.
Johor-based Crescendo Corp recently announced three major land disposals spanning a total of 103 acres at between RM120 and RM125 per square feet (psf). These parcels are freehold industrial land in the vicinity of Crescendo's Nusa Cemerlang Industrial Park (NCIP).
RHB Research said this transaction has set a new benchmark for industrial plot land.
"AME's i-TechValley is near NCIP, and both are located along the Second Link Expressway. AME has a remaining landbank of c.160 acres in i-TechValley, and we understand that the land is now marketed at RM80-85 psf to its recent clients. Given the new transacted price at NCIP, we see a potential upside of at least 10 per cent to its remaining GDV of RM1.17 billion for i-TechValley. At a land price of RM88-93 psf, this is still at a 22 per cent discount to the price at NCIP," RHB Research said.
It has raised AME's estimated GDV for all its industrial projects in Johor by 10-12 per cent on average, to reflect the updated market price for industrial landplot.
"We also narrow our discount to revised net asset value (RNAV) to 20 per cent (from 25 per cent), given the prevailing strong demand for industrial properties, as well as the upcoming catalyst for the Johor-Singapore special economic zone, which is expected to drive industrial activities further, RHB Research said.
It new target price of RM2 incorporates a 2 per cent environment, social and governance (ESG) premium, considering AME's 3.1 out of 4, which is a notch above the country mean.