KUALA LUMPUR: With its winning bid for a second tract of land at Plantation Close, Tengah, in Singapore, Sunway Bhd has affirmed its position in the strategic area that stretches from Iskandar Malaysia to Jurong East.
In an update, RHB Research reiterated its “buy” call and raised its target price on Sunway to RM3.45 from RM3 previously.
The research firm noted that the new land, measuring 4.95 acres, awarded to a partnership between Sunway and Hoi Hup Realty is adjacent to the four-acre parcel acquired by the consortium in September 2023.
Combined, the partnership has a total of nine acres in Plantation Close, Tengah, which should allow it to come up with a better design and concept for the development there, said the research firm.
“The land is strategically located, being surrounded by amenities like schools, a hospital, shopping mall, the Chinese Garden MRT station and future Tengah Plantation and Tengah Park MRT stations.
“We also highlight that Tengah Plantation is 6km away from the proposed Jurong East HSR terminal in Singapore,” it added.
According to RHB, the Sunway-Hoi Hup partnership has a first-mover advantage as the Tengah site is relatively new.
It said the growth prospects in the area are strong as the Jurong Region MRT line (to be completed in 2029) will boost connectivity.
Demand for executive condos remain encouraging in Singapore, as sector tightening measures announced last year hit the luxury property segment the most, it added.
RHB said the executive condo project to be developed on the new land could fetch a gross development value (GDV) of S$840mil, based on a gross floor area of 56,107 sqm and an estimated average selling price of S$1,450psf
This, together with the GDV of S$730mil for the previous parcel, would imply a combined GDV of S$1.57bil for both projects.
“As such, this area will likely be the key property sales and earnings driver of Sunway’s Singapore operations in the years ahead.
“We maintain our FY23-25 net profit forecasts, as earnings from EC projects will be recognised only upon completion,” said RHB.