Business Times: Thu, Aug 09
RISING land prices around the Johor Premium Outlet (JPO) in Kulai Jaya look set to climb further when Malaysia's Genting Plantations moves into the second phase of the project over the next few years.
As part of the JPO expansion plan, the unit of gaming conglomerate Genting Group is planning a theme park along with a several hotels, all of which will enhance the land value at its Indahpura development/Kulai Besar Estate, said OSK Investment Bank.
In a company update report this week, its analyst Alvin Tai said Genting Plantations had been offered RM50 (S$20) per square foot (psf) for land in the area compared to the last transacted price of RM28 psf.
Principally an oil palm planter in Malaysia and Indonesia, Genting Plantations is also a property developer in Johor, and according to its website, the Genting Kulai Besar Estate, now being developed as the "mega Genting Indahpura project", has some 3,200ha.
Launched at the end of last year, the JPO has been one of the first attractions in Iskandar Malaysia. With Legoland and Marlborough College soon to open their doors and other projects including an integrated oil and gas hub in Pengerang to the south of the state, realtors expect the Johor population to expand in the coming years given the employment opportunities.
Fairly comprehensive development of highways has also made getting around the state much easier.
Genting Group, which owns the Resorts World Sentosa (RWS) integrated resort in Singapore, holds nearly 53.6 per cent of its plantations unit. Given the proximity between RWS and Genting Indahpura, the group has been quick to look at how and where it can leverage both segments to the max.
In terms of real estate, CH Williams Talhar & Wong views Iskandar as having become "irretrievably entwined into the fabric of the Johor Bahru property market".
But in its 2012 property market report, the real estate consultants also pointed out the success of the zone depends on massive investment flows from Singapore, adding "the large numbers of Singapore residential property buyers has been a major factor in the uptrend in the market".
OSK lists the monetising of Indahpura as one of the "multiple catalysts in store" for the stock which fair value he pegs at RM11.22 - compared to its current price of around RM9.37 - based on a crude palm oil (CPO) price assumption of RM3,500/tonne for CY 2013 and RM3,000 for CY 2012.
Although challenging operating conditions this year could weigh on its earnings - overall production is projected to be flat - higher crude palm oil prices next year coupled with improving contribution from its Kalimantan operations are expected to boost earnings.
Mr Tai said the potential commercialisation of a biotech project - genome mapping - in which the company has invested some RM300 million since 2007 could also prove rewarding.
"Management guided commercialisation of its genome mapping works will begin late 2013 or 2014, with initial work to be in the form of services for filtering seeds," he said.
Martin Koh | 86666 944 | R020968Z
Sherry Tang | 9844 4400 | R020241C
Senior Sales Director
DTZ Debenham Tie Leung (SEA) Pte Ltd (L3006301G)
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