• Maintain BUY, with new MYR2.20 TP from MYR2.15, 29% upside and c.5% FY25F (Mar) yield. We are upbeat on AME Elite Consortium’s latest land acquisition. Although the land size is only 37.5 acres, it should help replenish its landbank in Johor, especially after it sold 34.91 acres in i-TechValley to a data centre player last month. We understand that management is still on the lookout for more landbank in Johor and the Klang Valley. Successful acquisitions should provide upside to our RNAV estimate.

• New land acquisition. AME entered into a sales and purchase agreement with Dahlia Utama (DUSB) to acquire 37.5 acres of freehold land within Taman Teknologi Johor, Senai, for a total cash consideration of MYR106.2m. DUSB is an oil palm estate owner, wholly owned by Lee Rubber Co. The acquisition will be funded via borrowings and internal funds. It is expected to be completed by 3QCY24.

• Details of the land. The total consideration translates into a land cost of MYR65 psf, rather close to AME’s previous acquisition cost of MYR59 psf for its 169.8-acre i-TechValley land at SiLC in 2020-2021. The land is strategically located within Taman Teknology Johor in Senai and fronting the Skudai-Senai Highway. The area is located in a matured area, as Senai town centre and Johor Bahru city centre are only 4km and 20km away.

• Likely fast turnaround for this land. Given the size and location of this land, we think AME will be able to turnaround the land rapidly given the robust demand for industrial properties these few years. AME has not submitted any detailed layout plan for the proposed development on the site, but based on our estimate, the new land could yield a potential GDV of MYR400m.

• Forecasts. We make no changes to our earnings forecast as AME may only launch its developments next year. We look forward to more sizeable landbank acquisition that could boost our RNAV estimate substantially.

• Higher TP. As we impute the incremental value from this new land, we raise our TP to MYR2.20 based on an unchanged 15% discount to RNAV and 2% ESG premium, given our ESG score of 3.1 for the company.

Source: RHB Research - 4 Jun 2024