Lagenda Properties Bhd - Marking Footprint in Negeri Sembilan
Fri, 21-Mar-2025 08:34 am
by Team Coverage • Apex Research

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LAGENDA (7179)

Target Price (RM)

1.550

Recommendation

Buy

Summary

  • LAGENDA is acquiring six plots of freehold land collectively measuring 138.2-ac in Senawang, Negeri Sembilan from Bright Term Sdn Bhd for RM60.2m to develop 1,800 afordable housing units that carries a total GDV of RM560m.

  • Acquisition price tag translates to RM10.00/sqf which is identical to the acquisition made by MATRIX at RM10.00/sqf for MVV 2.0 back in mid-2024 and translates to a favourable land cost-to-GDV ratio of 10.7%.

  • Re-iterate our BUY recommendation with a higher target price of RM1.55, based on 30% discount to RNAV and appraised with three-star ESG rating.

 

Landbank replenishment. LAGENDA’s wholly owned subsidiary, Vivafirst Sdn Bhd has entered into a Sale and Purchase Agreement (SPA) to acquire six plots of freehold lands located in Senawang, Negeri Sembilan for RM60.2m from Bright Term Sdn Bhd. 

 

Land details. Located in close proximity to Seremban town center (see below), as well as major landmarks and amenities such as Universiti Teknologi MARA (UiTM) Seremban Campus, Tunku Ja’afar Hospital, KIPMall Senawang, Lotus's Seremban Jaya and AEON Mall Seremban 2, we expect developments will be able to leverage onto the spillover of urbanisation and growth of Greater Klang Valley through accessibility via major highways like PLUS and LEKAS. 

 

Acquisition details. The acquisition price tag translates to RM10.00/sqf which is identical to the acquisition made in mid-2024 by MATRIX for MVV 2.0 at RM10.00/sqf. The acquisition will be funded by internal funds and external borrowings. As of end-4QFY24, we gathered that net gearing level remains fairly manageable at 0.4x, implying there is still room to gear up further along with sizable cash and bank balances of RM316.6m.

 

Development details. Revolves around the development of 1,800 units of a mix between single-storey terrace (c.RM280k) and double storey terrace (c.RM350k) which is priced more attractive than surrounding properties priced at c.RM300k for single-storey terrace and c.RM450k for double-storey terrace. Consequently, the development will bring a total GDV of RM560m to be develop over the next 4-5 years and potentially fetches GP margin of 30-35%.

 

Our take. We are positive on the acquisition which translate to a favourable land cost-to-GDV ratio of 10.7%. The move will boost enlarged total land size to >5,300-ac which carries an estimated total GDV of RM14.0bn to sustain earnings visibility over the long run. This also earmarked LAGENDA’s footprint into Negeri Sembilan after making strides in Perak, Kedah, Johor, Selangor and Pahang as the Group aims to replicate their success in affordable housing development projects.

 

Earnings revision. We tweaked our CNP slightly higher by 2.6%/2.8% for FY25F/FY26F, adjusting for the potential contribution from the abovementioned development.

 

Valuation & Recommendation. Re-iterate our BUY recommendation with a higher target price of RM1.55 (from RM1.49), based on 30% discount rate to RNAV and 0% ESG factored premium/discount based on appraised three-star ESG rating. We continue to favour LAGENDA for its position as a niche developer focusing onto sustainable and affordable township developments and growing presence within Malaysia.

 

Risk. Inability to replenish landbank, rising construction costs beyond expectations, and changes in housing as well as property regulations.

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