Life Water’s RM15mil KKIP acquisition to support Sabah expansion

PETALING JAYA: Life Water Bhd’s planned RM15mil acquisition of an industrial property in Kota Kinabalu Industrial Park (KKIP) is expected to support its longer-term expansion in Sabah, although the deal is unlikely to make a meaningful contribution to earnings in the near term, says MBSB Research.

“We view the acquisition as strategically sensible and supportive of Life Water’s longer-term expansion in Sabah, but do not expect a meaningful near-term earnings contribution given that the property will be used primarily as a warehouse,” the research house said.

MBSB Research maintained its “neutral” recommendation on Life Water, with an unchanged target price of RM1.63, based on its financial year 2027 (FY27) earnings per share (EPS) forecast of 9.6 sen and a 17 times price-to-earnings ratio.

The research house also made no changes to its earnings forecasts, noting that the acquisition was primarily an infrastructure investment rather than an immediate capacity or earnings catalyst.

Life Water’s wholly owned subsidiary, Green Borneo Industries (GBI), has entered into a sale and purchase agreement to acquire the 1.21-ha industrial property, which comprises a purpose-built office complex and ancillary workshop with a built-up area of 1,793 sq m.

The property is located within the same industrial park as GBI’s existing drinking-water manufacturing facilities. Its proximity to the manufacturing base should improve warehousing and logistics flexibility as production scales, while providing additional operating space for future expansion, MBSB Research said.

However, management does not expect the acquisition to have a material impact on the group’s FY27 earnings or EPS.