Essentials – Key takeaways from the Iskandar trip
· Connectivity is the key. The proposal of the Rail Transit System (RTS), which was identified to be in the vicinity of JB Sentral and Republic Polytechnic in Woodlands (target operation by 2018) would also serve as a kicker to improve the property sentiment in Johor. The RTS link will have a co-located (Customs, Immigration and Quarantine) facility in Singapore and another co-located CIQ facility in Johor Baru so that commuters need to clear immigration only once for each way of travel.
· All eyes on E&O Integrated Wellness Centre (IWC). E&O is a key beneficiary of Iskandar, with the IWC poised to be a significant earnings contributor in the next few years, while contributing an estimated 8% to its RNAV/share of RM3.05. The IWC (GDV: RM3.5b, details are on RHS table) is an integrated mixed development which focuses on healthy living in Medini. We understand that E&O has been working very closely with Temasek, and has reached the final stage in selecting a foreign technology/wellness partner. The first launch is slated to be in Mar 13, showcasing 458 terrace houses and 720 units of service apartments that would most likely be comparatively priced with neighbouring developments. We expect strong demand for this iconic development, backed by involvement of Khazanah and Temasek.
· An emerging O&G powerhouse. The Pengerang Integrated Petroleum Complex (PIPC), which will sit on single plot of land of over 21,000 acres, is targeted to attract RM69b worth of investments, accounting for a whopping 34% of the Economic Transformation Program’s (ETP) target for the nation (details on RHS table). The huge landbank required by the PIPC will greatly benefit landowners such as MPHB, whose 4,600 acre landbank that borders the east coast of Johor should be valued well in excess of our conservative RM2 psf (6% of its break-up value).