[%khpU%]
Research by HLIB
Sell – TP RM0.72

“Disposal of stake in Kulai lands to KLK"

UEMS announced the sale of its entire 40% equity stake in Aura Muhibah Sdn Bhd (AMSB) to KLK for RM386.2m, leading to AMSB ceasing to be an associate of UEMS post-disposal. The disposal involves 2.5k acres of Kulai plantation lands under AMSB. The selling price of RM8.87 psf is lower compared to recent transactions, reflecting a discount of 26.1% compared to IOIPG's sale to EcoWorld. The estimated net gain from this disposal is RM32m, to be recognized in 2HFY24, with proceeds intended to reduce debt – expected to lower UEMS net gearing to 40.5% from 46% in 1Q24. We maintain a SELL recommendation with a slightly lower TP of RM0.72 based on 65% discount to the revised estimated RNAV of RM2.06.

Analyst:
Tan Kai Shuen, CFA
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$KLSE-UEMS
Research by HLIB
Sell – TP RM0.72

“Disposal of stake in Kulai lands to KLK"

UEMS announced the sale of its entire 40% equity stake in Aura Muhibah Sdn Bhd (AMSB) to KLK for RM386.2m, leading to AMSB ceasing to be an associate of UEMS post-disposal. The disposal involves 2.5k acres of Kulai plantation lands under AMSB. The selling price of RM8.87 psf is lower compared to recent transactions, reflecting a discount of 26.1% compared to IOIPG's sale to EcoWorld. The estimated net gain from this disposal is RM32m, to be recognized in 2HFY24, with proceeds intended to reduce debt – expected to lower UEMS net gearing to 40.5% from 46% in 1Q24. We maintain a SELL recommendation with a slightly lower TP of RM0.72 based on 65% discount to the revised estimated RNAV of RM2.06.

Analyst:
Tan Kai Shuen, CFA
kstan@hlib.hongleong.com.my