• SkyWorld is entering into a partnership with Teambuild to incorporate the use of PPVC technology into its latest affordable housing development in Penang

• This aims to improve construction quality, expedite delivery timeline and drive costs lower

• Maintain BUY rating with unchanged RNAV-derived target price of RM1.10

Proposed collaboration with Teambuild

SkyWorld announced its entry into the prefabricated manufacturing sector through a collaboration with Teambuild Holding (S) Pte Ltd (Teambuild) to establish a joint venture subsidiary, Prefab Master Sdn Bhd, with a 70:30 ownership split. This will allow SkyWorld to incorporate prefabricated and prefinished volumetric construction (PPVC) technology in its latest RM13bn affordable housing development in Penang, with the first phase slated to launch in 2H25. The adoption of the PPVC solution is expected to improve the overall construction quality, expedite project delivery timelines, and improve cost efficiency, particularly given the large-scale development of over 35,000 units of Rumah Bakat Baru Madani over 15 years.

Technical partner with strong expertise in Singapore projects

We view this news positively, as the strong partnership and the use of newer technology will likely drive higher project margins for SkyWorld. Teambuild is a reputable partner specializing in prefabricated modular units, with a proven track record in executing public and private property development projects in Singapore. Its Singapore HDB project, Northshore Edge, was awarded HDB Construction of the Year in 2022, showcasing Teambuild’s strong proficiency in utilising PPVC technology. The JV entity will incur capex spending to set up the manufacturing facility; however, details regarding the investment and funding structure have not yet been disclosed.

Maintain BUY with TP of RM1.10

We make no changes to our earnings forecast at the current juncture, pending further clarity from management. We reiterate our BUY rating with an unchanged RNAV-derived target price of RM1.10. Key risks include lower-than-expected property sales and higher building material prices.

Source: Philip Capital Research - 21 Jan 2025