Acquiring New Land at Bukit Jelutong Worth RM23mn

INTA announced that its property arm, Seiring Setia Sdn Bhd, has signed a sale and purchase agreement with QL Agrifoods Sdn Bhd, a wholly-owned subsidiary of QL Resources Bhd, to acquire a freehold parcel of land spanning 11,026 square metres (approximately 2.7 acres). The land, valued at RM23mn, is situated in Bukit Jelutong, Selangor.

The purchase will be financed through a combination of internally generated funds and borrowings, with completion expected by 1HFY25.

Strategic Location With Excellent Accessibility

The land boasts a prime location, within a 15km radius of Sultan Abdul Aziz Shah Airport (commonly known as Subang Airport). It is also conveniently positioned near major highways, including the New Klang Valley Expressway (NKVE) and Shah Alam Highway.

This connectivity offers seamless access to a wide range of amenities and facilities, such as medical care at Columbia Asia Hospital Bukit Rimau, leisure destinations like Sultan Abdul Aziz Shah Golf & Country Club and Saujana Golf & Country Club, schools (SK Bukit Jelutong, SMK Bukit Jelutong, and SMK Shah Alam), and shopping centres, including AEON Mall Shah Alam and Subang Parade.

See Appendix 1 for the location of the land.

Our View

According to the management, it plans to develop the newly acquired land into an affordable housing project with an estimated gross development value (GDV) of RM220mn. The project is slated to be launched by the end of FY25. The acquisition cost of RM23mn represents just 10.5% of the total GDV, well below the 20% benchmark, highlighting a favourable land cost-to-GDV ratio.

Although the purchase price of RM194psf is 18.3% higher than EcoFirst Consolidated Bhd’s recent sale of a nearby 19,243 square metres leasehold parcel at RM164psf in March 2024, the premium is justified by the land's freehold status and excellent accessibility.

We view this acquisition positively, as it aligns with the company’s strategy to expand its landbank and diversify its revenue streams beyond construction. Notably, this will be the company’s second property project, following the maiden project launch of Senuri Residences in late 2023 which has achieved a take up rate of over 80% to date. As of end-September 2024, INTA maintained a healthy financial position with a net gearing ratio of 0.12x, providing sufficient capacity to support this acquisition.

Impact

No change to our earnings forecasts, pending the completion of the acquisition.

Valuation

We reiterate our Buy call with an unchanged target price of RM0.76, based on unchanged 11x CY25 earnings. We continue to like INTA for the following factors: (i) a direct beneficiary of the robust domestic property sector, (ii) strong earnings visibility backed by a resilient orderbook, and (iii) improving profitability.

Source: TA Research - 9 Dec 2024