Share
MacVisit – UEM Land Hldgs
Synonymous with IDR
· We recently met with UEM Land, which is synonymous with the Iskandar Development Region (IDR) in Johor. More accurately, it is the master developer of Nusajaya, the flagship zone of IDR, with 23,875 acres of landbank.
The company thinks critical mass in Nusajaya is at hand, perhaps in 2012/13, once the first couple of batches of students from Newcastle University move in, with further investments creating employment.
2010/11 outlook
· Critical mass by 2012/13? The Johor state administration has substantially moved to Nusajaya, but most of the 6,000 civil servants are still commuting from old Johor Baru. In 2011, the first batch of students will start on the new Newcastle University and Netherlands Maritime Institute campuses. Reading and Southampton Universities have submitted proposals to open campuses in 2012. In 2013, the Management Development Institute of Singapore campus is scheduled to open.
The education hub is slated to eventually house 15,000 students in addition to the teaching and support staff. Johor Premium outlets are to be ready in 3Q10, and Legoland is slated to be completed by 2012. The Coastal Highway is slated to be completed in 2011, shortening the travel time from old JB to Nusajaya from 30 minutes to 10. In addition, industrial land sales have been ahead of expectations.
· Cumulative committed investments of RM62.32bn as of June 2010. Of this, RM24.86bn is slated for manufacturing; RM18.37bn for properties; RM12.81bn for utilities, tourism and others; and RM6.28bn from the government; 43% is foreign. In 3Q10, Iskandar Malaysia Universiti Teknologi Malaysia Research Centre (Imrec) attracted a further RM500m from five
Chinese investors for green technology R&D, and Khazanah:Temasek will have a 50:50 JV to develop a 202.34ha wellness township in Danga Bay.
· Ongoing projects have RM10.1bn GDV remaining. For the most part, the company thinks its sales projections for these parcels up to 2018 are on track, with an average 25% margin.
· Future projects have GDV of RM10.5bn. This includes RM1.0bn outside Iskandar, in Cyberjaya. Most of these projects are due for launch in 2010/11, stretching to 2020.
· Management’s KPI target for 2010 is 35% revenue growth, 6% ROE.
Risks and valuation
· Risks to ULHB, based on consensus expectations, include: In the next 3-5 years, other developers like SPSB, IJM and KSL, which have sizable landbank in IDR, could compete for sales; the Singapore/Malaysia historical agreement to cooperate in developing IDR and KTM land in Singapore could be held up by red tape.
· Based on the consensus, ULHB is trading at a 68x 2010E PER, above the 15x property sector average, and at 3.1x 2010E P/BV, above the 1.5x sector average. The Macquarie Quant Alpha model gives ULHB a score of -7.6%, ranking it 175 out of 214, with low scores on growth, value, quality and profitability.
Ownership (as of 29 Apr 2010 unless otherwise stated)
· Outstanding ordinary shares 3,642.3m
· Outstanding MCRPS 2009–14 (strike RM1.82) 154.9m
· Diluted share base 3,797.8m
· As % of ordinary shares:
· Insider/stake ownership 77.14%
? UEM Group (owned by Khazanah) 77.14%
· Substantial shareholders 6.16%
? Employees Provident Fund (9 Aug 2010) 4.88%
? Public Mutual (various funds) 1.28%
· Free float ~20%
· Foreign shareholding ~7%
History and corporate governance
· August 2008 – Incorporated. Acquired property assets of UEM World Berhad and UEM Group under restructuring scheme by issuing 2,428.2m shares @RM0.52. Listed on
KLSE.
· April 2010 – 1:2 rights at RM0.80. Post rights issued share capital 3,642.3m. MRCPS strike price adjusted from RM2.21 to RM1.82.
Balance sheet data and refinancing (as of 1Q10)
· Net debt/equity: 32% (vs 28% in 4Q09)
· Long-term debt: RM58m (vs RM691m in 4Q09)
· Short-term debt: RM637m (vs RM9m in 4Q09)
· Cash/cash equivalent: RM56m (vs RM143m in 4Q09)
· In April 2010, a 1:2 rights issue raised RM970m, which, on a pro-forma basis, would put UEM Land in a net cash position.
Management and Directors background
Non-executive Chairman: Tan Sri Dr Ahmad Tajuddin Ali; also Chairman of UEM Group & Malaysian Oxygen, and director of Sime Darby, Bangi Golf and several private
limited companies. Previously CEO of Tenaga Nasional.
· Managing Director/Chief Executive Officer: Dato’ Wan Abdullah, previously CEO of United Malayan Land, property division director in Kumpulan Guthrie.
· Three of the seven directors are independent, only the MD/CEO is an executive director
Latest results highlights (1Q10)
· For 1Q10, revenue declined by 30% to RM39.7m, gross profit fell by 4% to RM12.8m, and pretax income contracted by 13% to RM4.0m, but net profit rose by 19% to RM3.1m.
· “The Group is optimistic that the property market will recover in 2010… aims to capitalize on the positive market sentiment by launching new residential projects in Nusajaya
and Cyberjaya, as well as launching new phases of our existing residential projects…The Board is confident that the Group will perform better in the remaining quarters of the
financial year as compared to the first quarter.” (25 May 10)
Average selling price of industrial land in SiLC
Synonymous with IDR
· We recently met with UEM Land, which is synonymous with the Iskandar Development Region (IDR) in Johor. More accurately, it is the master developer of Nusajaya, the flagship zone of IDR, with 23,875 acres of landbank.
The company thinks critical mass in Nusajaya is at hand, perhaps in 2012/13, once the first couple of batches of students from Newcastle University move in, with further investments creating employment.
2010/11 outlook
· Critical mass by 2012/13? The Johor state administration has substantially moved to Nusajaya, but most of the 6,000 civil servants are still commuting from old Johor Baru. In 2011, the first batch of students will start on the new Newcastle University and Netherlands Maritime Institute campuses. Reading and Southampton Universities have submitted proposals to open campuses in 2012. In 2013, the Management Development Institute of Singapore campus is scheduled to open.
The education hub is slated to eventually house 15,000 students in addition to the teaching and support staff. Johor Premium outlets are to be ready in 3Q10, and Legoland is slated to be completed by 2012. The Coastal Highway is slated to be completed in 2011, shortening the travel time from old JB to Nusajaya from 30 minutes to 10. In addition, industrial land sales have been ahead of expectations.
· Cumulative committed investments of RM62.32bn as of June 2010. Of this, RM24.86bn is slated for manufacturing; RM18.37bn for properties; RM12.81bn for utilities, tourism and others; and RM6.28bn from the government; 43% is foreign. In 3Q10, Iskandar Malaysia Universiti Teknologi Malaysia Research Centre (Imrec) attracted a further RM500m from five
Chinese investors for green technology R&D, and Khazanah:Temasek will have a 50:50 JV to develop a 202.34ha wellness township in Danga Bay.
· Ongoing projects have RM10.1bn GDV remaining. For the most part, the company thinks its sales projections for these parcels up to 2018 are on track, with an average 25% margin.
· Future projects have GDV of RM10.5bn. This includes RM1.0bn outside Iskandar, in Cyberjaya. Most of these projects are due for launch in 2010/11, stretching to 2020.
· Management’s KPI target for 2010 is 35% revenue growth, 6% ROE.
Risks and valuation
· Risks to ULHB, based on consensus expectations, include: In the next 3-5 years, other developers like SPSB, IJM and KSL, which have sizable landbank in IDR, could compete for sales; the Singapore/Malaysia historical agreement to cooperate in developing IDR and KTM land in Singapore could be held up by red tape.
· Based on the consensus, ULHB is trading at a 68x 2010E PER, above the 15x property sector average, and at 3.1x 2010E P/BV, above the 1.5x sector average. The Macquarie Quant Alpha model gives ULHB a score of -7.6%, ranking it 175 out of 214, with low scores on growth, value, quality and profitability.
Ownership (as of 29 Apr 2010 unless otherwise stated)
· Outstanding ordinary shares 3,642.3m
· Outstanding MCRPS 2009–14 (strike RM1.82) 154.9m
· Diluted share base 3,797.8m
· As % of ordinary shares:
· Insider/stake ownership 77.14%
? UEM Group (owned by Khazanah) 77.14%
· Substantial shareholders 6.16%
? Employees Provident Fund (9 Aug 2010) 4.88%
? Public Mutual (various funds) 1.28%
· Free float ~20%
· Foreign shareholding ~7%
History and corporate governance
· August 2008 – Incorporated. Acquired property assets of UEM World Berhad and UEM Group under restructuring scheme by issuing 2,428.2m shares @RM0.52. Listed on
KLSE.
· April 2010 – 1:2 rights at RM0.80. Post rights issued share capital 3,642.3m. MRCPS strike price adjusted from RM2.21 to RM1.82.
Balance sheet data and refinancing (as of 1Q10)
· Net debt/equity: 32% (vs 28% in 4Q09)
· Long-term debt: RM58m (vs RM691m in 4Q09)
· Short-term debt: RM637m (vs RM9m in 4Q09)
· Cash/cash equivalent: RM56m (vs RM143m in 4Q09)
· In April 2010, a 1:2 rights issue raised RM970m, which, on a pro-forma basis, would put UEM Land in a net cash position.
Management and Directors background
Non-executive Chairman: Tan Sri Dr Ahmad Tajuddin Ali; also Chairman of UEM Group & Malaysian Oxygen, and director of Sime Darby, Bangi Golf and several private
limited companies. Previously CEO of Tenaga Nasional.
· Managing Director/Chief Executive Officer: Dato’ Wan Abdullah, previously CEO of United Malayan Land, property division director in Kumpulan Guthrie.
· Three of the seven directors are independent, only the MD/CEO is an executive director
Latest results highlights (1Q10)
· For 1Q10, revenue declined by 30% to RM39.7m, gross profit fell by 4% to RM12.8m, and pretax income contracted by 13% to RM4.0m, but net profit rose by 19% to RM3.1m.
· “The Group is optimistic that the property market will recover in 2010… aims to capitalize on the positive market sentiment by launching new residential projects in Nusajaya
and Cyberjaya, as well as launching new phases of our existing residential projects…The Board is confident that the Group will perform better in the remaining quarters of the
financial year as compared to the first quarter.” (25 May 10)
Average selling price of industrial land in SiLC
SHARE
