Aquawalk Group Bhd - 30-year Lease Secured for Aquaria Kota Kinabalu
Thu, 19-Mar-2026 07:34 am
by Daryl Hon • Apex Research

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AQUAWALK (0380)

Target Price (RM)

0.37

Recommendation

Buy

  • AQUAWALK has signed a 30-year lease with Jesselton Docklands 1 Sdn Bhd for c.73,054 sq ft at The Bedrock, Kota Kinabalu, to develop and operate Aquaria Kota Kinabalu (Aquaria KK).

  • Aquaria KK was initially structured as a 60:40 JV with Qhazanah Sabah but will now proceed on a wholly owned basis, enabling full operational control.

  • No change to FY26–FY27 forecasts, while FY28 is lowered by 22% as Aquaria KK will only contribute from FY29.

  • We maintain our BUY recommendation with a TP of RM0.37, based on an unchanged 18x FY26F P/E applied to EPS of 2.0 sen.

Lease Details. AQUAWALK has signed a 30-year lease with Jesselton Docklands 1 Sdn Bhd for c.73,054 sq ft at The Bedrock, Kota Kinabalu, for the development and operation of its new oceanarium, Aquaria KK. Jesselton Docklands is a 35-acre port regeneration project located within the central business district of Kota Kinabalu, Sabah, which is expected to boost tourism activity in the area. This marks the Group’s first venture into East Malaysia and a key milestone in its regional expansion strategy, positioning it to capitalise on Sabah’s strong tourism growth (CY25: 3.8m vs. CY24: 3.1m; +22% YoY). The project is now expected to be completed in FY29 (vs. FY28 previously).

 

The Aquaria KK project is no longer a 60:40 JV. Aquaria KK was initially planned as a 60:40 joint venture between Aquawalk and Qhazanah Sabah Bhd. Following further evaluation, the Group has opted to proceed on a wholly owned basis, enabling full operational control.

 

With Qhazanah as a JV partner, the project would benefit from local institutional backing, particularly in navigating regulatory processes such as planning approvals, regulatory compliance and operating licences, as well as facilitating coordination with state and local authorities. As a Sabah state-linked entity, Qhazanah could also enhance the project’s positioning as a key tourist attraction, supporting visitorship growth and ticket sales. In addition, the JV structure would allow the Group to share capital commitment and project risk.

 

Without the JV partner, the Group will bear a higher capital commitment and full exposure to execution risk, as it will now fully fund the RM70.5m project rather than share costs under the previous 60:40 structure. RM39.6m will be funded via last year’s IPO proceeds, with the balance sourced from internally generated funds or borrowings. Given Aquawalk’s strong net cash position of RM180.9m, we do not view funding as a constraint. We maintain our forecasts for Aquaria KK, as the Group has a proven track record in developing and operating similar assets including Aquaria KLCC and Aquaria Phuket, and the project leverages its existing business model and in-house expertise. 

 

Notably, full ownership allows the Group to consolidate 100% of earnings. Based on our estimates, this translates to c.RM6.6m in PAT upon completion in FY29, compared to c.RM4.0m under the previous JV structure, implying an uplift to long-term earnings contribution. Our projections assume an initial visitorship of c.360,000 per annum with gradual ramp-up over time, while maximum capacity is expected to be similar to Aquaria KLCC at c.2.9m visitors annually.

 

Earnings Revision. While the 30-year lease agreement and shift to full ownership for Aquaria KK are positive, the completion timeline has been pushed back to FY29. We maintain our FY26–FY27 earnings forecasts but lower FY28 earnings by 22%, as Aquaria KK will only begin contributing once operational in FY29.

 

Valuation and Recommendation. We maintain our BUY recommendation with a TP of RM0.37, based on an unchanged 18x FY26F P/E applied to EPS of 2.0 sen.

 

Risks. Failure to secure new strategic locations and lease renewals, revocation of licenses & permits and high fixed cost structure that may pressure margins.

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