Research houses are upbeat on plantation giant Kuala Lumpur Kepong Bhd’s move to develop a 1,500-acre technology and industrial hub in Tanjung Malim, Perak.
Launched last Friday, the KLK TechPark is expected to generate a gross development value (GDV) of RM3.5 billion over the next decade. The conglomerate also pulled off a huge coup by confirming Chinese automotive giant BYD as anchor investor for the project’s Phase 1.
The world’s largest electric vehicle (EV) maker has purchased 150 acres for its first assembly plant in Malaysia, which is slated for completion by end-2026.
Public Investment Bank (PublicInvest) is positive on the initiative as “it not only helps to monetise KLK’s land assets but also reduces its heavy reliance on plantation earnings”.
To diversify income streams, it anticipates KLK’s property division to also expand its portfolio beyond Bandar Seri Coalfields in Sungai Buloh.
“At present, the property segment accounts for only 1% of group earnings,” it said in a note today.
The research house said that over time, the new industrial hub will help unlock the value of KLK’s remaining land as infrastructure and connectivity are further enhanced.
It estimates the park’s 1,500 acres could be worth at least RM3 billion, or about 13.3% of its market capitalisation, based on a RM45 per sq ft (psf) assumption. It noted industrial land transactions in recent years have ranged between RM15 and RM55 psf.
Given its direct access to the North-South Expressway and proximity to the Automotive High-Tech Valley, it believes KLK’s land should command a premium above its RM45 psf assumption.
Phase 2, scheduled for launch by end-2025, will feature a 200-acre vendor park for automotive and manufacturing players.
PublicInvest estimated the project could potentially contribute an additional 3%-5% to its FY2026-2027F earnings forecasts.
It maintained its “outperform” rating with a target price (TP) of RM22.72, a 13% upside from its current price.
The stock closed 12 sen or 0.6% higher today at RM20.08, valuing the group at RM22.41 billion. It has fallen 7.4% year-to-date.
Long-term growth driver
RHB Research said it was “upbeat” on KLK’s technology park as it provides a long-term growth driver for its property division, spread over the next 10 years.
It said immediate profit contributions from the land sale to BYD should range from RM100 million to RM120 million.
The research house maintained its “hold” call on KLK with a TP of RM21.50.
One of Malaysia’s largest plantation companies, KLK has about 300,000 hectares of planted area for both oil palm and rubber with the land bank across Malaysia, Indonesia and Liberia. It has also diversified into resource-based manufacturing (refinery and oleochemicals).
The family of executive chairman Lee Oi Hian controls KLK via its majority stake in Batu Kawan Bhd, which in turn has a 48% stake in the group.
