Thursday, July 05, 2007
The Little Bull Terrier Again
Will resume trading tomorrow, the important points in Ekovest's proposal:
a) a market valuation of RM2.0bn by Chesterton
b) a discount of 28% on the purchase consideration
Considering that there is another caveat that the SC will have to OK the independent valuation as well. The SC's valuation cannot be more than 15% lower than the RM2.0bn figure. The 240 acres will be developed as part of the Master Plan for Danga Bay land as follow: 48 acres Financial Center; 70 acres Villa Precinct; 57 acres Commercial Center; and 65 acres for Promenade. Based on the proposal, development period will be over 15 years with a GDV of RM19.2bn. Of the 240 acres, approvals from Majlis Bandaraya JB has been obtained for 176 acres of development.
Key point is the RM2.0bn valuation, which can be said to be very conservative considering it has to be approved by SC at the end of the day. That makes for a very rough RM105psf for the waterfront property. Now, of course we are talking of the super prime landbank, but the repercussions are substantial for the following companies with super-prime landbank in similar locations:
Super-prime (within 10km radius from causeway)
Danga Bay 1,380 acres
Tebrau 1,012 acres
KPRJ 1,148 acres
UEM World 15,000 acres
Then there are those within the radius but no water frontage:
Gamuda 1,200 acres
Mulpha 800 acres
Khazanah 1,00 acres
The proposed valuations should set off feverish negotiations for more deals. The valuation of RM105psf compares very favourably to the rising interest as the previous transaction was the RM65psf which AEON paid back in February for a parcel in Nusajaya - mind you this parcel is quite inferior compared to Danga Bay. Can expect reports revaluing the related companies, plus you will see more foreign companies signing off on actual deals to buy property and/or land in IDR. Once more and more benchmarks have been set, the rest just falls into place.
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