DRB-Hicom, also rated an add with a target price of RM1.69, will be an indirect beneficiary, through its 53.5% stake in Pos Malaysia Bhd.
PETALING JAYA: A number of companies will directly or indirectly benefit from the development of the Digital Free Trade Zone (DFTZ), said CIMB Research. The research house said in a report that the potential beneficiaries from the DFTZ included Malaysia Airports Holdings Bhd (MAHB), DRB-Hicom Bhd, Genting Plantations Bhd (GenP) and LBS Bina Group Bhd.
It said MAHB will be a key beneficiary as the airport operator could earn additional income from the tenancy of the low-cost carrier terminal (LCCT) and the establishment of a regional e-commerce and logistics hub in the KLIA Aeropolis.
CIMB Research expects the establishment of the regional e-commerce and logistics hub to take place in 2019 at the earliest.
It also noted that before the end ofthis year, Lazada Malaysia, the affiliate of Alibaba, will move its warehouse into the premises of the old LCCT, which has been transformed into a cargo centre.
DRB-Hicom, also rated an add with a target price of RM1.69, will be an indirect beneficiary, through its 53.5% stake in Pos Malaysia Bhd.
“We expect Pos to play a key role as an e-fulfilment service provider through its logistics arm, POS Aviation, previously known as Kuala Lumpur Airport Service (KLAS). KLAS provides ground handling services, in-flight catering, cargo handling, warehousing space and supply chain management including custom forwarding agent services,” it said. CIMB Research expects Pos to benefit from volume growth driven by movement of goods through the DFTZ.
“Based on our sensitivity analysis, for every 10% movement in Pos’ share price, our sum-of-parts based target price for DRB-Hicom will increase or decrease by about 4-5% on average,” it said.
Meanwhile, GenP’s land surrounding KLIA Aeropolis will see value rising as DFTZ develops.
“As such, GenP is a potential indirect beneficiary. We estimate that every RM5 per square foot rise in value of GenP’s land in Sepang will boost the group’s valuation by RM240mil (or 30sen/share),” it said.
GenP owns some 1,100 acres of land in Sepang, within 30min drive from the KLIA Aeropolis.
The plantation owner’s annual report showed the value of the Sepang landbank registered in its book was only RM21mil or 44 sen psf. GenP (rated add with a target price of RM12.30) recently sold 582 acres of land in Semenyih (about an hour from Sepang) for RM136.5mil (or RM5.40 psf) and booked a gain of RM132mil from the disposal.
For LBS Bina, employment arising from the operation of DFTZ could boost the demand for properties in the surrounding area.
“Among the property stocks under our coverage, LBS is a big beneficiary as it has land parcels located within 30min drive from the KL Aeropolis. LBS’s Bandar Saujana Putra (BSP) project, which is about 28km away from KLIA, is directly connected to the Elite Highway via a dedicated interchange. LBS still has about 137 acres of land in BSP,” CIMB Research said.
The research house said the DFTZ could raise the remaining gross development value (GDV) of BSP from the current RM3.4bil.
The property developer’s 633-acre land in Dengkil, less than 20km from KLIA, will see its maiden launch in the second half and the newsflow on KL Aeropolis could enhance the take-up rate of the development, CIMB Research said.
The research house rated LBS an add with a target price of RM2.15.
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