PETALING JAYA: Sime Darby Property Bhd
is in a good position to benefit from the technology investment inflows to Malaysia, thanks to its ample land bank and robust balance sheet.
According to RHB Research, the property company could see further upside potential from Google’s recent announcement of its US$2bil investment in the country, noting the market has not fully priced in the positive effect from the US tech giant’s investment.
“The tech giant’s announcement of RM1.74bil in capital expenditure for the first Google data centre and GoogleCloud region may just be the beginning.
“The potential impact of this on earnings may be under-estimated,” the brokerage wrote in its report yesterday.
It noted that Google had only announced its data centre and Google Cloud region at Sime Darby Property’s Elmina Business Park (EBP) in Selangor, adding there could be further investments for subsequent phases, which could be worth RM7.5bil, at the development at a later stage.
Citing the upside potential, RHB Research raised its target price for Sime Darby Property to RM2 from RM1.54 previously, and it reiterated “buy” on the counter.
“Our new target price reflects the incremental value of the contribution from the Google facility, as well as the faster turnaround of Sime Darby Property’s industrial parks ahead,” it explained.RHB Research said while the initial Google data centre was estimated to have a capacity of 80MW, the entire 49-acre site earmarked for Google at EBP could accommodate up to 200MW to 250MW capacity.
It noted the data centre investment is expected to boost Sime Darby Property’s total asset under management from RM4.4bil currently to around RM6bil to RM7bil by 2026.
At that level, the group could generate a total recurring income of RM120mil to RM130mil at the operating level.
As such, RHB Research raised its 2026 earnings forecast for Sime Darby Property by about 3% to reflect the initial contribution from the Google data centre as the facility might only be completed in the second half of 2026.
The Google data centre at EBP will power the tech giant’s popular digital services, such as Search, Maps and Workspace. When operational, Malaysia will join the 11 countries in which Google has built and now operates data centres.
RHB Research said Sime Darby Property has land bank and robust balance sheet to accommodate more data centre demand, allowing the group to capture the prevailing investment wave, driven by global tech giants, in the South-East Asia region.
“The company currently has five industrial park projects with a remaining total land area of more than 2,000 acres, and we believe that the basic infrastructure facilities are ready at these industrial sites, since projects are ongoing,” it explained.
“Sime Darby Property is an experienced player in industrial development, and the segment now accounts for 30% of its total property sales,” the research house added.
