New deal to replenish AME Elite’s Johor landbank

PETALING JAYA: AME Elite Consortium Bhd is expected to see its medium- to long-term prospects strengthened by its latest land acquisition in Johor, which should replenish its industrial development landbank.

The new site is also well positioned to benefit from sustained demand for industrial properties in the Malaysia-Singapore Special Economic Zone (JS-SEZ) and ongoing shifts in global supply chains.

RHB Research said the acquisition is strategically located and could potentially generate a gross development value (GDV) of about RM1.3bil, with the land cost remaining reasonable despite rising land prices in Iskandar Malaysia.

“We are positive on AME Elite’s latest acquisition of land.

“The land is strategically located and should well capture the medium- to long-term demand for industrial properties under the JS-SEZ, as well as benefit from prolonged US-China trade tensions,” the research house said.

It maintained its “buy” call on AME Elite and raised its target price to RM2.33 from RM2.30, implying 76% upside and an estimated dividend yield of about 5% for the financial year ending March 31, 2027 (FY27).

At least look, the stock was trading at RM1.32 per share.

“While we are upbeat on AME Elite’s latest land acquisition, our new target price is now based on a larger discount to revalued net asset value of 35% (from 30%) to reflect the volatile geopolitical situation in the Middle East, as well as uncertainty over the local political landscape,” RHB Research explained.

The research house noted that AME Elite’s latest land acquisition will help replenish the group’s depleting Johor landbank for its i-Park industrial development.

Upon completion of the acquisition in the first half of calendar year 2027, AME Elite’s total remaining landbank is expected to increase to almost 500 acres, with more than 40% located in Iskandar Malaysia.

The four parcels of freehold agricultural land in Jeram Batu, Pontian, span 176.45 acres and were acquired from Hak Soon Seng Plantation (M) Sdn Bhd, a Singaporean-owned oil palm planter in Malaysia, for RM199.8mil.

“The purchase consideration translates to a land cost of RM26 per sq ft, which is still rather reasonable, as land prices have generally risen in Iskandar Malaysia.

“This price increase has been driven by various infrastructure developments, foreign direct investment and the advent of data centres in the area,” RHB Research said.

The site, located along Jalan Ulu Pulai, connects Jalan Gelang Patah with Ulu Choh and Pekan Nanas.

The land parcels are about 9km from the Malaysia-Singapore Second Link Expressway and 26km from Singapore’s Tuas Checkpoint, and is adjacent to Setia Business Park.

However, RHB Research expects a longer gestation period, as land conversion and earthworks are required before development can begin.

“Given the required time for land conversion as well as earthworks, we believe this new project can only contribute to group numbers from FY28 onwards,” the research house said.