AME Elite shares rise to new record high on Pulai land sale

• The land was sold to Digital Hyperspace Malaysia Sdn Bhd (DHM) at a record RM138 per sq ft, marking AME Elite's first deal in the data centre segment.

KUALA LUMPUR (May 14): Shares of AME Elite Consortium Bhd (KL:AME) rose to a new all-time high on Tuesday on the back of a spike in trading volume after the company announced a land sale for RM209.84 million to a Hong-Kong based centre operator.

AME Elite climbed as much as 10% or 18 sen to RM1.96 during the morning session. The counter settled at RM1.78 at Tuesday’s noon break, valuing the construction company at RM1.14 billion.

AME Elite's trading volume surged to 7.64 million, its highest since December 2019. The figure is 13 times higher than its 200-day average volume of 574,272 shares.

The company's move to sell the 11 plots of industrial land in Pulai, measuring 34.91 acres, came as no surprise due to surging demand for such industrial land in Johor, particularly for data centres, artificial intelligence, and cloud computing, said analysts.

The land was sold to Digital Hyperspace Malaysia Sdn Bhd (DHM) at a record RM138 per sq ft, marking AME Elite's first deal in the data centre segment.

“Given the land size, we believe the capacity of this data centre could be quite big,” RHB Investment Bank said in a note to clients.

“The disposal, which is expected to be completed in 4QFY2025 [fourth quarter ending March 31, 2025] will yield a net gain of RM85.1 million, almost doubling our initial earnings forecast for FY2025. Based on our new profit forecast and a dividend payout of about 30%, our FY2025F dividend per share is now raised to eight sen,” it said.

RHB estimated AME Elite’s net profit to rise to RM166 million for FY2025, more than double the RM81 million projected for FY2024.

According to the research house, AME Elite's management is actively seeking new land acquisitions. This is important because its land bank in Iskandar Malaysia is shrinking due to strong sales, like the recent deal with DHM. Essentially, the company needs to acquire new land to maintain its growth trajectory.

“If strategic land deals materialise, this should be the next re-rating catalyst for the stock given the potential upside to our RNAV [revised net asset valuation] estimate.

“With the upcoming detailed announcement of the Johor-Singapore Special Economic Zone (JS-SEZ), we think the demand for industrial land and developments would be even stronger due to higher foreign and domestic direct investments,” RHB added.

AME Elite’s share price has risen over 6% year-to-date and 28% in the past 12 months. In light of the recent share price appreciation, Apex Securities downgraded the stock from "buy" to "hold" but maintained its target price of RM1.95 based on a price-to-earnings ratio of 14 times and estimated FY2025 earnings per share of 14 sen.

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