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We recently made a trip down to Iskandar where we met up with authorities IRDA and
IIB as well as companies such as KimLun, ULHB, Sunway, SP Setia and Gamuda. Our
on the ground feel is that development is picking up with 2012 as the potential inflection
year for Iskandar. Investment targets have been surpassed and foreign participation is
coming in. While initially skeptical, we are turning more positive towards Iskandar. The
key sectors to benefit from Iskandar are property and construction. We recommend
ULHB and KimLun as proxies to Iskandar’s growth story.
IIB as well as companies such as KimLun, ULHB, Sunway, SP Setia and Gamuda. Our
on the ground feel is that development is picking up with 2012 as the potential inflection
year for Iskandar. Investment targets have been surpassed and foreign participation is
coming in. While initially skeptical, we are turning more positive towards Iskandar. The
key sectors to benefit from Iskandar are property and construction. We recommend
ULHB and KimLun as proxies to Iskandar’s growth story.
Stepping on site. With the news flow on Iskandar Malaysia picking up, we recently organised
a 2 day trip down south to see what all the fuss is about. We were joined by a group of 20 fund
managers and buy side analysts from both Malaysia and Singapore who were equally as keen
to check out Iskandar’s progress. During our visit, both the Iskandar Regional Development
Authority (IRDA) and Iskandar Investment Bhd (IIB) updated us on its developments. We also
managed to meet up with companies such as KimLun, UEM Land, Sunway, SP Setia and
Gamuda which brought us around for site visits at their respective operations within Iskandar.
What is Iskandar? Launched in 2006, Iskandar is one of Malaysia’s 5 growth corridors.
Situated in Johor, Iskandar covers an area of 221,643 hectares which is 3x the size of
neighboring Singapore. Currently, there are 1.35m people living in Iskandar which makes up
43% of Johor’s population. It is the vision of Iskandar “to develop into a strong and sustainable
metropolis of international standing”. Iskandar is overseen by IRDA, a Federal Govt body
responsible for driving stakeholders towards achieving its vision. Being located next to
Singapore, we feel that Iskandar is trying to mimic Shenzhen, which has benefited from its
close proximity to Hong Kong and Macau.
Situated in Johor, Iskandar covers an area of 221,643 hectares which is 3x the size of
neighboring Singapore. Currently, there are 1.35m people living in Iskandar which makes up
43% of Johor’s population. It is the vision of Iskandar “to develop into a strong and sustainable
metropolis of international standing”. Iskandar is overseen by IRDA, a Federal Govt body
responsible for driving stakeholders towards achieving its vision. Being located next to
Singapore, we feel that Iskandar is trying to mimic Shenzhen, which has benefited from its
close proximity to Hong Kong and Macau.
Ride on construction and property. We believe that the key sectors to benefit from Iskandar’s
developments are construction and property. As the Govt continues to pour in more funding for infra,
more jobs will be implemented, benefiting construction. With more infra in place coupled with greater
Malaysia-Singapore cross boarder connectivity, we expect property prices to further increase in
Iskandar, benefiting developers with exposure there. Higher property launches will also have a
secondary spillover impact to contractors, as they will be employed to construct the developments.
Iskandar exposure picks. For Iskandar exposure, we recommend
developments are construction and property. As the Govt continues to pour in more funding for infra,
more jobs will be implemented, benefiting construction. With more infra in place coupled with greater
Malaysia-Singapore cross boarder connectivity, we expect property prices to further increase in
Iskandar, benefiting developers with exposure there. Higher property launches will also have a
secondary spillover impact to contractors, as they will be employed to construct the developments.
Iskandar exposure picks. For Iskandar exposure, we recommend
(i) UEM Land (BUY, FV: RM3.52) for the property side given that it is the largest land owner at Nusajaya and
(ii) KimLun Corp (BUY, FV: RM2.32) for the construction angle as it has a strong orderbook track record in Johor.
Other names offering Iskandar exposure include SP Setia for its Setia Eco Gardens development, Gamuda for its Horizon Hills development and Sunway which is constructing Legoland and BioX-Cell.