KUALA LUMPUR - RHB Small Cap Asean Research has reaffirmed its "buy" rating on AME Elite Consortium Bhd, with the target price raised from RM1.82 to RM2, in light of the robust demand for industrial land in Iskandar Malaysia. The revised valuation reflects a positive outlook for the company’s strategic landbanks and the potential growth driven by the anticipated Johor-Singapore special economic zone.
AME's industrial projects within its i-TechValley have been particularly noted for their significant gross development value (GDV) prospects. RHB Research has increased the GDV estimate for i-TechValley by 10% to RM1.17 billion, following recent land disposals by Crescendo Corp near the Nusajaya Tech Park (NCIP), which have set new price benchmarks at RM120-RM125 per square foot (psf).
Despite AME’s 160-acre landbank adjacent to NCIP being marketed below these rates at RM80-85 psf, there is potential for an increase in line with current market trends. This adjustment is part of a broader update to Johor’s industrial project GDVs, which have been raised by an average of 10-12%, and a narrowing of RNAV discounts to 20%.
The firm also recognizes AME's potential for an RNAV re-rating amid ongoing developments in the Johor-Singapore special economic zone. Additionally, AME's substantial post-REIT listing war chest of RM180 million is poised to support further expansion and development opportunities.
RHB Research's valuation also includes a 2% ESG premium due to AME’s favorable rating of 3.1 out of 4, indicating strong environmental, social, and governance practices that contribute to the company's overall appeal to investors.
The strategic positioning of AME's landbank along the Second Link Expressway and its proximity to NCIP are key factors in this optimistic assessment, as they offer a competitive edge in the thriving industrial sector of Johor. The company's ability to capitalize on these advantages is expected to drive its financial performance and shareholder value in the coming period.
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