Sime Darby Guthrie Bhd - SDG Unveils New Industrial Park Project
Mon, 21-Apr-2025 07:17 am
by Steven Chong • Apex Research

Counter

SDG (5285)

Target Price (RM)

5.20

Recommendation

Buy

Executive Summary

  • EcoWorld, Sime Darby Guthrie (SDG), and NS Corporation are collaborating on Eco Business Park VII project, with GDV of RM2.95bn.

  • We view this development positively as it helps unlock more value from underutilised land, though its impact on near-term earnings is expected to be limited.

  • We maintain our BUY recommendation with an unchanged target price of RM5.20, pegged to a 20.4x PER on FY26F fully diluted EPS of 25.4sen, and appraised with a three-star ESG rating.

 

New industrial park development. EcoWorld, Sime Darby Guthrie (SDG), and NS Corporation will be partnering to develop Eco Business Park VII, a nine-year industrial park project that carries a GDV of RM2.95bn. As part of the Malaysia Vision Valley 2.0 (MVV 2.0) initiative, the project aims to drive investment and support high-growth sectors by leveraging the combined strengths of all three parties in land, development, and planning. SDG will hold a 30% stake in the SPV and contribute a 1,195-ac plot of land in Bukit Pelandok. The land transaction is expected to complete by 2HCY25, with development set to begin thereafter.

 

Our Take. While we view this development positively, its impact on near-term earnings is likely to be limited. Based on our preliminary estimates, a 10% project margin could deliver recurring income of c.RM9.8m p.a. over the nine-year development period. Nonetheless, we have yet to factor in potential gains from land disposals into our projections as we deemed it one-off in nature.

 

Outlook. SDG is expected to continue unveiling more industrial park developments, capitalising on its extensive landbank which it its most valuable asset. These initiatives are aimed at unlocking greater value from underutilised land and are well aligned with national priorities outlined under the New Industrial Master Plan (NIMP) 2030 and the National Energy Transition Roadmap (NETR).

 

Earnings revision. No changes to our earnings forecasts at this stage, as the contribution from this project is not expected to significantly move the needle in the near term.

 

Valuation & Recommendation. We maintain our BUY recommendation on SDG with an unchanged target price of RM5.20, based on a 20.4x P/E multiple applied to FY26F EPS, with no ESG premium or discount, reflecting its three-star ESG rating.

 

Risk. Export ban and regulations, changing weather patterns affect FFB production, taxation and export ban in Indonesia threatens local CPO demand, shortage of labours and rising operational cost.

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.353768 4.388176
EUR 4.972823 4.977858
CNY 0.599000 0.599600
HKD 0.561405 0.565352
SGD 3.320010 3.343413