PETALING JAYA: Property specialist AME Elite Consortium Bhd should see earnings growth in financial year 2025 (FY25) and FY26, driven by bookings conversions, asset monetisation and the debut of its new industrial park in Penang and land bank in Johor, says RHB Research.
After having posted RM175mil of new sales in the nine months of FY24, RHB Research said the conversion of AME’s RM282mil worth of bookings in the pipeline could potentially produce higher margins in hand for the group.
“We believe the profit margins from these recent deals, which are largely located at i-Tech Valley, may be rather lucrative given the escalating prices of industrial land in Johor, driven by the influx of foreign direct investment,” the research house stated, adding that the closing of the deals may occur in the upcoming months.
As several industrial assets are expected to be injected into AME REIT in the second half of FY24, RHB Research said the proceeds from theasset monetisation exercise should help enlarge AME’s war chest for acquiring land.
Its worker dormitories in i-Tech Valley, which are scheduled to be completed in the first half of 2025 (1H25), are expected to provide RM9mil in rental income, underpinning longer-term inorganic growth for AME REIT as the asset is expected to add an extra 2,683 beds to the current 6,407-bed capacity.
Meanwhile, with 135 acres left in i-Tech Valley, as well as remaining land at other i-Parks in Johor also being depleted, AME hinted that several negotiations for land acquisitions are currently underway.
RHB Research stated that it anticipates AME to make an announcement on new land acquisitions in the upcoming quarters.
Given the high level of investor interest in Johor and the expectation that Singapore would continue to drive investments in the long run via the future Johor-Singapore Special Economic Zone, the research house believes this could be a powerful catalyst for the group’s share price.
Meanwhile, RHB Research expects AME’s maiden industrial park in Penang to attract a lot of interest following the group’s track record in Johor as well as Penang’s standing as a major electrical and electronics manufacturing hub.
According to the research house, AME is also optimistic about luring certain businesses from its present clientele’s ancillary sectors to establish plants there.
The 175-acre Penang industrial park is scheduled to open in 2H24.
It noted that an approximate budget of RM100mil was set aside for the infrastructure and ground work, with development on the latter anticipated to begin in the upcoming quarter.
RHB Research maintained a ”buy” call on AME and raised its target price to RM2.05 per share based on a 15% upside with about 2% FY24 yield.