Share
KUALA LUMPUR: The plan by IGB Corp Bhd to develop a RM3 billion megamall in Johor Baru has been viewed positively by analysts.
IGB is partnering with Johor-based Selia Pantai Sdn Bhd, via a 70:30 joint venture, to develop the megamall on three parcels of leasehold land measuring 15ha within the Southkey development in Johor Baru.
Southkey is a mixed commercial development undertaken by Selia Pantai spanning 134ha within Permas Jaya. It is located five minutes away from the Sultan Iskandar Customs, Immigration and Quarantine (CIQ) complex.
In a research note yesterday, AmResearch estimated that the new megamall will provide IGB with an additional net operating income of RM50 million annually, assuming a net lettable area of 1.5 million sq ft with a conservative rental rate of RM5 per sq ft and an occupancy rate of 70%.
IGB posted a net profit of RM237.65 million for FY11 ended December, a 36.1% increase from a net profit of RM174.62 million in FY10.
AmResearch said it believes the new megamall will be a success given Southkey’s sizeable catchment population of more than 120,000 and the lack of quality malls within the development.
The research house was positive on IGB expanding its retail mall portfolio, which would provide a new income stream. IGB’s retail mall portfolio comprises Mid Valley Megamall and The Gardens Mall, both held under subsidiary KrisAssets Holdings Bhd.
“We continue to like IGB because the group is looking at crystallising the deep value of its retail malls in Mid Valley City — triggered by high implied capital values,” said AmResearch, referring to IGB’s ongoing plan to do a REIT based on its malls.
The research house recommended a “buy” on IGB with an unchanged fair value of RM3.50.
IGB closed one sen lower to RM2.77 yesterday with 1.8 million shares traded. Its shares have climbed about 46% from RM1.90 in November 2011.
