PP 7767/09/2010(025354)

20 September 2010

Malaysia
RHB Research
Corporate Highlights Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

Se ct or Updat e
20 September 2010
MARKET DATELINE

Property Recom : Overweight

(Maintained)
Latest Land Deal Not Reflective of Market Value

Table 1 : Property Sector Valuations

EPS EPS growth PER P/NTA P/CF GDY
FYE Price (sen) (%) (x) (x) (x) (%) Rec
(RM/s) FY10 FY11 FY10 FY11 FY10 FY11 FY10 FY10 FY10
SP Setia Oct 4.37 18.6 21.7 15.7 16.7 23.5 20.2 2.11 41.4 2.7 MP
IJM Land Mar 2.35 12.1 17.3 22.7 43.2 19.4 13.6 1.80 6.2 0.9 OP
Suncity Dec 3.87 34.8 38.7 63.5 11.1 11.1 10.0 0.78 3.1 9.3 OP
Mah Sing Dec 1.74 14.0 17.2 23.6 22.8 12.4 10.1 1.58 32.8 3.3 OP
Sunrise Jun 2.06 29.9 33.2 10.6 11.1 6.9 6.2 0.84 9.9 2.4 OP
YNH Dec 1.69 15.8 17.6 22.6 11.6 10.7 9.6 0.92 16.8 2.4 MP
Paramount Dec 4.25 58.3 63.8 10.3 9.3 7.3 6.7 0.93 7.5 6.9 OP
Glomac Apr 1.48 13.9 15.4 22.1 10.4 10.6 9.6 0.78 9.2 5.7 OP
Hunza Jun 1.42 27.6 20.9 3.4 -24.2 5.2 6.8 0.60 5.0 3.9 TB
Sector Avg 11.9 10.3 1.15 14.6 4.2
* price at 17 Sept 10

♦ Record price for Bukit Bintang land? Over the past few days, it was widely reported
that the latest land deal in Kuala Lumpur Bukit Bintang by CDL Hotels (M) S/B (a unit of Table 2. Fair values
(RM/share)
London-based Millenium & Copthorne Hotels, which is 53% owned by Singaporean Company Price FV
billionaire Kwek Leng Beng) to Urusharta Cemerlang (owns and operates the Pavilion KL SP Setia 4.37 4.66
IJM Land 2.35 3.00
Mall) was transacted at record high price of RM7,209 psf. The land is said to be the last Suncity 3.87 5.45
empty lot in the prime location of Jalan Bukit Bintang. The price is more than three Mah Sing 1.74 2.06
times higher than the latest transaction price of RM2,200 psf for a piece of 0.65 ha land Sunrise 2.06 2.88
YNH 1.69 1.86
in Jalan Perak by Kuok Brothers and FFM Bhd in May 2010. Paramount 4.25 5.80
Glomac 1.48 1.56
♦ A unique case. The transaction price of RM7,209 psf for a piece of land measuring Hunza 1.42 1.58
29,127 sqf located at Jalan Bukit Bintang is a unique case, in our view. A premium is
paid by the buyer, due to the value-added advantage and development potential of the
land to integrate with the development of Pavilion KL Mall. While the development plan
for the land is not reported, we believe the buyer has various options to utilise the land,
such as: (i) enhancing the traffic access in the surrounding Pavilion Mall – a cut-through
between Jalan Bukit Bintang and Jalan Raja Chulan; (ii) providing linkage to Fahrenheit
88, which will also be operated by Urusharta Cemerlang; or (iii) additional parking space
for Pavilion mall. Hence, the transacted value of the land at RM210m is relatively
minimal compared to the total value of Pavilion mall, which we should view as an
entirety. This also means that the price of RM7,209 psf is not reflective of the market
value of the land in KL city centre area.

♦ A re-rating for KLCC properties? Land deals in the KLCC area have picked up
since end 2009, and land prices will continue to hold well due to scarcity of prime land.
However, we do not think the recent land deals will be a re-rating catalyst for the high-
rise residences in KLCC area, which occupancy is highly dependent on the inflow of
expats, which is tied to the amount of FDIs into Malaysia.

♦ Risks. Key risks for the property sector will continue to be: 1) cap on lending rate
imposed by Bank Negara Malaysia; 2) higher tax bracket for real property gain tax
(RPGT); and 3) country risks.

♦ Maintain Overweight. We maintain our Overweight stance on the property sector. Our Loong Kok Wen, CFA
top picks remain unchanged: IJM Land (OP, FV = RM3.00), Suncity (OP, FV = (603) 92802237
loong.kok.wen@rhb.com.my
RM5.45) and Mah Sing (OP, FV = RM2.06).

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 20 September 2010

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