SINGAPORE (March 14): UOB Kay Hian is starting coverage of Hatten Land with a “buy” call and a target price of 43 Singaporean cents.
In a Tuesday report for retail investors, UOB believes there is plenty of potential in the Malaysian developer due to clear earnings visibility from its prime development portfolio.
This includes three integrated mixed-use developments (Hatten City Phase 1 & Phase 2 and Harbour City) and a commercial project (Vedro by the River). With the exception of Harbour City, the other projects are already in advanced stages of completion and sales.
Hatten Land’s right of first refusal (ROFR) contract with its sponsor grants the company access to 22 land plots as well. It has already entered into a non-binding agreement to acquire five of these plots at value accretive prices.
“This would allow Hatten Land to remain asset-light, and push landbanking risk to its parent company Hatten Group. This also affords Hatten Land the luxury of choice in selectively developing projects based on its business strategy and the competitive environment,” explained UOB.
The company’s established track record in Melaka also makes it a dependable pick. Hatten Land has accumulated over 10 years of exposure as Hatten Group’s property development arm and its first development project, the Dataran Pahlawan Melaka Megamall, is now one of Melaka’s largest shopping malls.
Additionally, Melaka’s burgeoning domestic tourism sector could send investor demand towards Hatten Land for its serviced residences.
“A blue sky scenario could see the target price expanding to 53 cents (from 43 cents), if the ROFR discount narrows to 60% upon more details on the remaining ROFR exercise price and development plans,” added UOB.
Shares of Hatten Land are trading flat at 28 cents as at 11.30am. — theedgemarkets.com.sg