A&M and Rakuten Tp 2.20

A&M REALTY BHD 

By Rakuten Trade Research

Buy (initiated)

Target price: RM2.20

RAKUTEN Trade Research has initiated coverage on A&M Realty Bhd with a “buy” call and a target price of RM2.20, underpinned by the property developer’s positive and exciting transformation ahead.

The research house indicated that A&M’s trump card moving forward is its 1,938-acre Pulau Carey landbank with a gross development value (GDV) of RM6.8bil.

“A&M’s Pulau Carey landbank is expected to be further boosted by potential spillover impacts from developments of an integrated maritime city on Pulau Carey spearheaded by Sime Darby Bhd, MMC Corp Bhd, Adani Ports & Special Economic Zone Ltd with total infrastructure investments of up to RM200bil,” said Rakuten Trade Research in a note.

The research house has likened A&M as the best proxy play on the potential port development at Pulau Carey, riding on Sime’s and MMC’s lead.

Earlier this year, it was reported that the Port Klang Authority has proposed to build a giant port on Pulau Carey. The island, measuring 13,000ha, is about 25 times the size of Singapore’s Sentosa Island.

Currently, A&M’s ongoing 125-acre Amerton Cove Golf and Island Resort on Pulau Carey has been in operation since 2013. The resort and its golf course remain a popular destination with more than 32,000 golfers monthly.

“Amerton Cove’s integrated township green concept tourism theme development would provide superior earnings visibility of up to 2025 for A&M. The property developer’s on-going property projects include Amverton Links in Klang and Amverton Hills in Sungai Buloh which are 70% completed and will be ready for launching in the second half of 2017 with GDV of RM205.1mil,” it said.

A&M has a massive GDV in the pipeline worth more than RM10.7bil, spanning over 1,410 acres of low cost land.

Rakuten Trade Research said that the company’s healthy balance sheet with zero borrowings, makes A&M an attractive value proposition. To note, A&M has a net cash of RM64.1mil.

The Main Market-listed A&M’s other divisions namely the plantation and manufacturing segments continue to be profitable, contributing more than 10% of the property developer’s net profit.