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- The group is collaborating with the Negeri Sembilan state government to develop a 300-acre industrial park in Port Dickson, and with Sime Darby Property Bhd (KL:SIMEPROP) for a 2,000-acre site on Carey Island.
KUALA LUMPUR (June 25): CIMB Securities sees significant potential in SD Guthrie Bhd’s (KL:SDG) proposed joint ventures (JVs) to develop industrial parks in Port Dickson and Carey Island, but notes that the financial impact will hinge on the speed of land sales and income generation from the developments.
The group is collaborating with the Negeri Sembilan state government to develop a 300-acre industrial park in Port Dickson, and with Sime Darby Property Bhd (KL:SIMEPROP) for a 2,000-acre site on Carey Island.
According to CIMB, the progress of these projects depends on obtaining the necessary approvals and executing successful land launches.
If all seven memoranda of understanding (MOUs) and agreements signed result in land sales averaging RM10 per square foot, CIMB estimates that total proceeds could reach RM2.57 billion for 5,900 acres.
Based on assumptions including a low land cost base, a 30% retained stake in the JVs, and a 24% corporate tax rate on land sale gains, SD Guthrie could potentially realise around RM1.3 billion in profit from these disposals.
PhillipCapital said the JVs would help boost SD Guthrie’s long-term recurring revenue and unlock the value of its land through a replicable monetisation strategy.
The Port Dickson JV marks SD Guthrie’s third industrial collaboration in Negeri Sembilan, following previous ventures with Eco World Development Group Bhd (KL:ECOWLD) and TH Properties Sdn Bhd.
PhillipCapital noted that SD Guthrie owns 35,982 hectares in Negeri Sembilan, with a net book value of RM808 million as of end-2024. Parcels near infrastructure or urban expansion zones have significant upside potential, it added.
SD Guthrie has guided for total land disposal gains of about RM500 million to be realised in FY2025.
However, with the Port Dickson Free Zone still in early planning, PhillipCapital expects earnings contributions to be backloaded, with meaningful impact likely from financial year 2027 onwards.
PhillipCapital maintains a "Buy" rating on SD Guthrie, with a 12-month target price of RM5.21, citing solid fundamentals, strong cash flow, a 3% dividend yield, and a strategic land monetisation plan.
Meanwhile, CIMB retained its “Hold” rating, with an unchanged target price of RM5.06.
As of 9:20am, SD Guthrie shares traded at RM4.56, giving the group a market capitalisation of RM31.3 billion.
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