KUCHING: SHL Consolidated Bhd (SHL) remains an undervalued property developer, bearing in mind its low cost landbank in suburb areas with good accessibility and high potential development value.
The research arm of Public Investment Bank Bhd (Public Invest Research) said the company’s landbank and properties stand at a market value of more than RM1 billion and could potentially double to RM2 billion if the company begins its redevelopment programme.
The research firm noted that SHL’s assets are currently worth more than the company’s market capitalisation of approximately RM561 million thus pointing to the company to create more value through property development in the future.
In particular, Public Invest Research observed that SHL’s market value could potentially double to RM2 billion if the property developer converts its golf course land into property development.
The research firm forecasted the 160-acre (64.7 hectare) golf course land, which is located in the self-contained township of Bandar Sg. Long in Selangor could be worth RM900 million based on current market price of RM130 per square feet.
Public Invest Research noted the golf course land could fetch the price of RM130 per square feet due to strong demand towards suburb properties as land in the city centre remains expensive and limited choices available.
Citing an example from another property developer, Eco World Development Group Bhd’s flagship township project, EcoMajestic Phase 1, which is slightly further from Bandar Sg Long has received strong take-up rate of 95 per cent during its launching two months ago.
The research firm believed both Bandar Sg. Long and Semenyih could be the next property hotspots for residential property development given its ease of access to the SILK Highway as well as future Mass Rapid Transit (MRT) stations nearby.
Besides that, Public Invest Research said the value of the land held by the company which it acquired in the late 90s has appreciated substantially.
The cost of SHL’s land at Bandar Sg. Long has a net book value of RM5 to RM30 per square feet against the current market value of RM130 per square feet.
SHL’s quarry land in Semenyih has a net book value or cost of RM5 per square feet against the current market value of RM11 to RM20 per square feet while its Rawang Corporate Industrial Park has land cost of RM1.40 per square feet versus the current market value of RM57 per square feet.
Therefore, Public Invest Research said the property developer could potentially gain from land
revaluation and higher income generated from its property development in the future.
The group owns about 433 acres (175 hectares) of landbank for property development in Selangor and Negeri Sembilan spanning across Bandar Sg. Long (48 acres); Semenyih (118 acres); Alam Budiman (20 acres); Rawang (10 acres); Batang Kali (88 acres); Serendah (48 acres); and Parit Tinggi (101 acres).
Those landbanks if being developed into properties such as residential, commercial and mixed development are expected to enhance the value of the company.