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Saturday, November 3, 2007

KSL increasing landbank outside Johor

By The Star

PETALING JAYA: KSL Holdings Bhd, a developer with projects in Johor, is beefing up its landbank outside the state, which is expected to boost its earnings next year.

TA Securities in a research report said KSL had acquired about 500 acres near Bandar Bukit Tinggi in Klang. According to sources, at RM8 to RM8.50 psf, the purchase cost is well below the market price.

The group was planning a mixed development township there to replicate its success in Johor. “Based on our experience, it would take at least nine months before the first launch, hence we can expect the maiden contribution (from the project) to be in by fourth quarter 2008 or early 2009,” said the report.

According to the research outfit, this development is set to be the company's next earnings driver in the longer term.

“KSL is also poised to benefit from the Iskandar Development Region (IDR) with its cheaply acquired sizeable landbank of more than 1,100 acres strategically located in the IDR area and the Johor Baru City Centre,” the report said.

“Based on our recent talk with the management, the gross development value of its IDR project of more than RM2.5bil is expected to keep the company busy for the next five years.” It said the company's sales and earnings for the remaining year would continue to be from its flagship developments in Johor, namely Taman Bestari Indah, Taman Nusa Bestari, Taman Kempas Indah and Maharani Rivera.

“Its long-term lease of the RM20mil mini-complex in Maharani Rivera with Giant Hypermarket (effective July) is expected to generate a stable recurring income of RM4mil per annum, offering a fairly attractive rental yield of 20%.''

TA Securities has maintained a “buy” call on the counter with a target price of RM2.75. KSL closed yesterday at RM2.17, up 8 sen, on volume of 298,900 shares. -

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