PETALING JAYA: SD Guthrie Bhd, formerly known as Sime Darby Plantation Bhd
, could see its Carey Island land valued at RM7.1bil.
This valuation represents about 23% of the company’s current market capitalisation, according to Maybank Investment Bank (Maybank IB) Research.
The research house highlighted that SD Guthrie owns around 11,000 ha of land on Carey Island, accounting for roughly 85% of the island.
“Assuming its unconverted agriculture land is valued at RM6 per sq ft, SD Guthrie’s Carey Island land may be worth RM7.1bil,” it noted.
However, at this juncture, Maybank IB Research has maintained its earnings forecast, noting that the monetisation of Carey Island land is expected to happen gradually over time.
As such, the research house maintained a “buy” rating on SD Guthrie with a target price (TP) of RM4.96 per share.
The development of Carey Island is expected to gain momentum with the Selangor State Development Corp (PKNS) reportedly taking the lead in spearheading the island’s transformation.
“Whoever is awarded the concession to develop and run the port in Carey Island will have to form a joint venture with PKNS.
“The multi-billion ringgit port development could start soon, if the target of getting it up and running by 2030 remains,” the research house noted.
The Carey Island development will be carried out in four phases – phase 1A (2025-2030), phase 1B (2030-2040), phase two (2040-2050) and phase three (2050-2060).
The port is expected to cater to an annual throughput capacity of up to 30 million twenty-foot equivalent units (TEUs) of containers.
“Upon completion, it will have a total wharf length of about 16km, longer than Westports Holdings Bhd’s 11km total wharf length,” it added.
Maybank IB Research noted that the port will take up only a small portion of the Carey Island land, as most of the port will be constructed on reclaimed land extending into the Straits of Malacca.
Nonetheless, besides port development, the research outfit said PKNS is also looking at developing Carey Island into a port city.
“We believe the development of the proposed port city at Carey Island will require land and will boost SD Guthrie’s land value over time,” it noted.
Additionally, the connectivity of Carey Island is set to improve with the completion of the South Klang Valley Expressway in 2013, and it will receive another boost when the southern stretch of the West Coast Expressway is completed within the next couple of years.
“Sizeable estate lands within Kuala Langat were transacted between RM6.60 and RM19 per sq ft in recent years,” it said.
