KUALA LUMPUR (Aug 3): RHB Research believes Eastern & Oriental Bhd (KL:E&O) remains undervalued and has raised its target price further after the property developer’s latest acquisition of a 1.4-acre freehold land at Jalan Kia Peng through a joint venture with Majestic Gen.

RHB in a note on Monday said potential land disposals at Andaman Island, particularly the commercial component, could create a new pricing benchmark and serve as a key share price catalyst.

The research house, which already had the highest target price among analysts covering E&O, raised its target price to RM1.08 from RM1.05 following the deal. It maintained its ‘buy’ call, with the valuation based on a 55% revalued net asset value discount and 2% ESG discount.

RHB said the RM189.9 million land acquisition, which translates into RM3,106 per sq ft, is attractive compared with recent KLCC land transactions. The new high-end residential project could potentially generate RM1.1 billion in gross development value (GDV) and strengthen E&O’s position in the premium KLCC property segment.

The research house added that recent KLCC land deals point to growing confidence in the luxury property market, supported by demand from foreign buyers and affluent locals. E&O’s existing projects, Conlay and The Peak, are also nearing full sales.

Bloomberg data shows three out of four analysts covering E&O have ‘buy’ ratings, with an average 12-month target price of 98 sen.

At noon break the stock was trading half a sen or 0.67% lower at 74.5 sen a share, valuing the company at RM1.88 billion.