FREE MALAYSIA TODAY. 31ST JULY: RHB Research increases Sime Darby Property’s target price to 67 sen from 55 sen.
Sime Darby Property Bhd (SDP) rose to its highest since March 2022 even as research houses issued positive reports on the property developer.
Its share price rose as high as 3 sen or 5.13% at 61.5 sen, giving the group a market capitalisation of RM4.15 billion.
The counter also appeared to have been boosted by its rooftop solar initiative under the national energy transition roadmap (NETR) launched last Thursday.
During the launch, economy minister Rafizi Ramli said Sime Darby Property had committed to the installation of 4.5MW solar capacity across 450 homes in the City of Elmira and Bandar Bukit Raja, Selangor, with up to 10kW capacity per house.
Meanwhile, RHB Research has maintained its “buy” call on SDP, with a higher target price (TP) of 67 sen from 55 sen, although the project will unlikely have a notable impact on near-term earnings.
“We like the management’s effort to enhance utilisation of its non-core land bank that has limited development opportunities, which would otherwise be left vacant for years,” said its analyst Loong Kok Wen.
With regards to the housing solar project, SDP also reported the commissioning of utility-scale ground mounted solar farms in Jerai, Kedah with 365 acres and Pagoh, Johor (635 acres), with a potential capacity of 330MW.
“The offtakers will be the industrial, commercial, and retail users across its townships. The management has indicated that Sime Darby Property could be the generator, distributor, and offtaker of solar energy,” she said.
Furthermore, she noted participation in solar power generation remains limited to developers possessing substantial land holdings, particularly in remote regions with no immediate development prospects.
“These are typically the government-linked investment company developers, and Sime Darby Property is one of them.
“Other developers will probably not get involved, given limited land resources,” Loong added.
In a note last Friday, CGS-CIMB also maintained its “add” rating of 59 sen for SDP, with an unchanged TP of 73 sen.
Its analyst Chong Tjen-San said the initiative on the developer’s plans to introduce solar solutions for townships supports the government’s vision to achieve 70% renewable energy generation capacity by 2050.
At market close, SDP’s share price rose 2.5 sen or 4.27% to 61 sen, valuing the company at RM4.11 billion.