KUALA LUMPUR (April 23): UEM Sunrise Bhd (KL:UEMS) is a potential target for takeover or privatisation for its strategic Johor land bank and depressed valuations, RHB Research flagged on Thursday.

Despite being one of the worst-performing property stocks this year, UEM Sunrise owns increasingly valuable land bank in Iskandar Malaysia, particularly at Gerbang Nusajaya, thanks to the upcoming Rapid Transit System Link and Johor-Singapore Special Economic Zone, the research house said.

UEM Sunrise’s current market capitalisation of RM2.6 billion significantly undervalues its 4,516.7 acres of land at just RM13 per square feet, RHB Research said.

Merger and acquisition would not be new for the group, as there was a proposed merger with Eco World Development Group Bhd (KL:ECOWLD) in 2020 that was later aborted due to challenging economic conditions.

Separately, CIMB Securities said that UEM Sunrise is planning to triple its return on equity by 2030, driven by accelerated property launches, expansion of investment assets up to RM1.5 billion and commercialisation of its land bank. 

Johor remains a key market for the group with pre-sales projected to rise up to RM1.5 billion in the financial year ending Dec 31, 2026 (FY2026) and FY2027.

There are now three ‘buy’ and four ‘hold’ calls on the stock, with an average target price of 68 sen, according to the seven analysts tracked by Bloomberg.

RHB Research and CIMB Securities decided to maintain their ‘buy’ calls on the stock, with target prices of 86 sen, implying an upside of 71%. UEM Sunrise was trading at 51.5 sen at the time of writing on Thursday, giving it a market capitalisation of RM2.6 billion.

AskEdge data shows that while UEM Sunrise has a price-to-earnings ratio of 36.0 times — above most of its peers — its price-to-net-asset-value ratio of 0.4 times is the lowest in the group.