The research house downgraded its call with an unchanged target price (TP) of RM1.43 as Lagenda’s share price has “appreciated in recent months”.
Since Nov 1, when it was at RM1.16, it has risen 27.6% to a three-month high of RM1.48 on Wednesday when the JV was announced. At 4.18pm today, it was down 3.38% or five sen to RM1.43, valuing the group at RM1.2 billion.
Nevertheless, Apex Research was optimistic on the 50:50 JV between Lagenda and SimeProp to set up Seed Homes Lagenda to develop affordable homes.
Apex Research said Lagenda will leverage SimeProp’s position as one of the country’s largest property players while offering its expertise in affordable housing township development.
Seed Homes Lagenda has acquired 249 acres of land from SimeProp in Gurun, Kedah, for RM50 million to embark on its first affordable township project.
Offering over 3,000 single-storey terraced houses, the project will have an estimated gross development value (GDV) of RM750 million to RM850 million, the research house said. The development is expected to be launched at year end or early next year.
“We believe this JV project could significantly contribute to Lagenda’s revenue growth in the next financial year. With an estimated selling price of between RM250,000 and RM300,000, we reckon this move (will) strengthen the group’s presence beyond Perak,” it said.
On the risks to its call, Apex Research said this included the inability to replenish land bank, an unexpected further rise in construction costs, and changes in housing as well as property regulations.
AmInvest maintains ‘buy’ call
Meanwhile, AmInvestment Bank (AmInvest) has maintained its “buy” call on Lagenda with a higher fair value (FV) of RM1.88 per share (from RM1.85/share previously) after accounting for contribution from the new Gurun project.
“We hold a favourable view on this development, which leverages on its strategic location and the potential spillover effects of industrial growth in Gurun,” it said.
Looking ahead, it added there is prospect for Lagenda to capitalise on SimeProp’s extensive land bank in Malaysia for further development in its affordable housing segment.
It noted that Lagenda’s ongoing township in Kedah, which includes 1,924 units, has experienced “a remarkable response” with a take-up rate of over 99% for phase 1 and 2.
“We continue to like Lagenda due to its niche in underserved landed affordable housing developments in second-tier states with a large population of B40 and M40 income groups,” it added.