Wednesday 27 March 2013

Penang Major Roads & Sea Tunnel Project

Penang government has revealed the detail of its undersea tunnel (third link) and major road projects in the island. The proposed road projects are Lebuhraya Tun Dr Lim Chong Eu - Gurney bypass, Lebuhraya LCE - Ayer Itam bypass, Tanjung Bungah - Teluk Bahang paired road & Gurney - Bagan Ajam undersea tunnel.

     Overview of Penang proposed road projects

The  Tanjung Bungah - Teluk Bahang route will start at Seri Tanjung Pinang - Fettes road junction (in front of Island Plaza). New straight paired road will be built to replace the current hilly & curvy portion of Jalan Lembah Permai. The new 4-lanes road will run along the straight part of Jalan Lembah Paintai (near TAR college), then cut through the hill alongside the current Jalan Batu Feringghi, to end near the Teluk Bahang dam.

This route will save us a lot of time and headache travelling to & from Batu Feringghi & Teluk Bahang. It will certainly raise the property value in Batu Feringghi area which are previously restricted by accessibility.

The Lebuhraya LCE - Ayer Itam bypass will start in front of IJM's The Light phase 1, then runs towards west in underground tunnel, goes beneath Jalan Sultan Azlan Shah, emerging to ground level before Jalan Bukit Gambir, then cruises along the hilly terrain behind Island glades to reach All Season Park at Bandar Baru Ayer Itam.

This road will help to solve the terrible traffic along Greenlane (Jalan Masjid Negeri), including the notorious underpass at Jelutong roundabout. Besides, the congestion at Lorong Batu Lanchang & Lebuhraya Thean Teik could also be eased.

Property around Bandar Baru Ayer Itam's "graveyard" such as All Season Park, Shineville Park etc will benefit from this Ayer Itam bypass

The Georgetown Inner Ring Road, which connects Lebuhraya LCE and Persiaran Gurney, is likely an underground tunnel for its whole length. It will start at Jalan Sg Pinang - LCE junction, runs underneath Jalan Sg Pinang, Jalan Perak and then Jalan Pangkor to connect with the proposed undersea tunnel at Gurney.

This underground tunnel will divert traffic away from Georgetown World Heritage area.

Besides, there will be a new road connecting Gurney to Seri Tanjung Pinang, which helps to reduce traffic along Jalan Kelawai and Jalan Tanjong Tokong.

The undersea tunnel will connect to Butterworth Outer Ring Road (BORR) in the mainland at Bagan Ajam near Pantai Bersih. From here, it provides easy access to north south highway, Butterworth-Kulim Expressway (BKE) and the future Penang Sentral transportation hub.

     Projects Schedule

The detail regarding the proposed project can be found in the Penang government website

Thursday 21 March 2013

AEON To Lift Alma Soon?

We know that AEON (previously Jusco) has bought part of the land at Impiana Commercial Hub from WingTai Asia (DNP) in August 2011 to build a shopping center in Alma. After clearing the land since about 1 year ago, there is no further activity on the land.

Then AEON Japan announced in Nov 2012 that they have bought over Carrefour operation in Asia. This means that there will be an AEON hypermarket in Bukit Minyak only few km away from Alma. Everyone is wondering will AEON Malaysia change their plan of building a shopping center in Alma?

Anyway, the existing Carrefour will be changed to AEON Big, a hypermarket style catering lower-medium income group. Thus it should be different from an AEON departmental store which caters for medium-higher income group.

Since March this year (2013), we can see some earthwork activity going on at the AEON Alma site. Heavy machinery have been moved in, and the construction of drainage system at the boundary has begun.

     Drainage work at boundary

Furthermore, piling work has started at the site since a few days ago. This is a good news for Alma residents and investors, as the work on AEON shopping complex building might just have been started.

     Piling on-going

     AEON Alma costruction site

Has AEON changed their plan on the shopping complex and build other things? Lets look at the construction sign board at the construction site. It says that "1 blok kompleks perniagaan 4 tingkat" or "1 block of 4-storey shopping complex" will be built at the site. The developer is "DNP Land".

     It's a 4-storey shopping complex,  including basement?

After this, what event do you think will follow after everyone knows that AEON is definitely coming to Alma? Yes, right, you got it. DNP Land will make their move surely, by launching the luxury condominium BM Mahkota probably in 2nd quarter. The selling price? Sorry, don't expect anything less than RM300psf I guess.

     BM Mahkota, ICH & Hotel, with AEON at the back

If the plan of AEON complex really materialized, it will surely bring a lot of positive to Alma. After 2-3 years, almost coincides with the occupation of various surrounding high-end housing scheme such as Jesselton Hill, Hillpark Residence, Permatang Sanctuary, Tropicale Residency, Alma Indah, BM Mahkota etc, Alma area will be lifted to another level.

If you want to get a property in Alma and wish to wait for the price to drop first, then you probably have to wait, wait and wait, though current new property price here is a bit "ridiculously high"...

     Impiana Boulevard @ ICH

     Impiana Avenue @ ICH

Wednesday 20 March 2013

Analysts Bullish On Tambun Indah

At the time this post is written, Tambun Indah's share price has just surged to 90sen, well above its resistant of 87sen with a high volume. If this price and volume can sustain until the market close, then technically speaking, Tambun is well position to test the next resistant at RM1.

Most investors are worry about the effect of upcoming general election on the stock market. Almost certainly, the KLCI will fall (perhaps by quite a margin) once the election day is announced, and continue to fall til the day of election. If the current gov wins, the KLCI may stage a rebound. If the gov lose, KLCI may also lose due to panic selling of index stocks which are almost all governement-linked.


Non-index-bound small counters may also be affected by the big market. However, the effect might not be so serious. Tambun is one of those small stock that I think should be able to resist the wind of change, as it is fundamentally strong.

RHB Research and Affin Investment have come out with an analyst report recently in March. RHB raises Tambun's target price to RM1.08 from previous RM0.95.

Below are extract from RHB research report 6 Mac 2013:

Premium Outlet coming to Batu Kawan.

The upside potential for real estate values in Penang mainland is picking up. The soon-to-be completed PSB is a key catalyst to attract investments and business activities to the Batu Kawan area, coupled with the relatively cheaper land and property prices compared to the island. Bose, Honda, Ibiden and Bosch are among the foreign investors currently building their plants at the Batu Kawan industrial area. Recently, the Penang state government announced plans to set up a Premium Outlet next to the PSB interchange at Bandar Cassia. Bandar Cassia is a township led by the Penang Development Corp, with a size of over 6,000 acres. Mirroring the spillover of the Johor Premium Outlet to Kulai/Senai areas, we believe the Batu Kawan area will experience similar growth trends in real estate values, as the outlet will help to attract tourists from the Penang Island to the mainland (total number of tourists to the Penang state is about 6m per year) and spur business activities in the surrounding areas. Note that, based on our checks, a small plot of agricultural land at Kulai (near JPO) is now going at about RM20-25 psf (some 30-40% appreciation over the last two years), and there are many new property developments in the vicinity since the commencement of JPO in end-2011. Meanwhile, it was also mentioned during the briefing that IKEA is also looking to set up an outlet at Batu Kawan. In our view, the completion of the PSB in Aug/Sept this year will be the biggest catalyst in rerating the stock. Located at just 15-min away from the PSB, TI’s >500-acre Pearl City township is set to be the prime beneficiary.

       In Batu Kawan... only rumour?

>RM800m worth of properties for sale this year.

TI achieved total property sales of RM400m last year (from RM347m in 2011), which was in line with our target but exceeded management’s conservative target of only RM350m. We expect record sales of RM450m in 2013, on the back of RM550m worth of new launches as well as RM283m worth of unsold properties that were mostly rolled out late last year. Out of the total amount of new projects, almost RM440m (about 80%) projects are located at Pearl City. These include Pearl Residence 1, Pearl Impian and Pearl Avenue (2 and 3-storey storey shop lots pricing at RM700-800k and RM1m per unit). We believe the demand for properties on the mainland, and particularly at Pearl City, will remain strong. The relatively cheaper property pricing compared to the island, and the “catalytic projects” as well as efforts by the state government to promote investments in the state will be the key drivers for real estate growth on the mainland. In anticipation of the completion of PSB, property sales for the Pearl City have been strong since the launch 2-3 years ago. Sales generated from the Pearl City alone increased to RM174m in FY12 from RM163m in FY11. We believe TI still has room for higher pricing for its Pearl City products, due to its strategic location of the land as well as the current pricing level, which is still relatively decent despite the annual increase in average selling price.

       Pearl Avenue @ Pearl City

New plans for the 107-acre business park at Pearl City.

The MOU with the Straits International School lapsed in Feb due to some disagreement on certain terms and conditions. We understand that there are currently a few education players in talks with management to build a campus within the township. Pearl City, in our view, offers a ready population and houses to complement the learning institutions. Therefore, although the MOU with the Straits International School has been terminated, we believe TI can easily replace it with another reputable education provider. Meanwhile, TI is also negotiating with a shopping mall owner/operator to set up a retail mall to cater for the township. This potential partner currently owns four shopping malls in the northern region of Peninsular Malaysia, and hence TI will be able to leverage on the partner’s expertise to operate a retail property. A 50:50 JV will be formed between TI and the partner to construct a mall with a gross built-up area of 500-600k sqf. The mall will be integrated with the lifestyle commercial precinct. We are positive to the JV, as the commercial component will help to add long-term value to the entire township development.

       Could one of the "reputable education provider" be KDU? 


Although the share price has appreciated by 33% since we first issued a note in Oct last year, we continue to see value in the stock. TI is an attractive Penang mainland play ahead of the completion of the PSB. The bridge is expected to yield significant economic impact on the Batu Kawan area. After we update the latest financial numbers and our RNAV estimate, we raise our fair value on TI to RM1.08 (from RM0.95), at a lower 35% discount (from 40%) to RNAV, as the completion of the PSB will bring greater visibility on the outlook of the mainland market, as well as shorten the landbank turnaround time.

Extract from Affin Investment Bank Report 18 March 2013:

Tambun Indah is a good proxy to South Seberang Perai

Second Penang Bridge to spur development in South Seberang Perai

We expect the Second Penang Bridge to have a major positive impact on the development of South Seberang Perai. In Batu Kawan, Penang Development Corporation (“PDC”) owns 6,717 acres of land bank, of which it plans to develop 1,640-acre of affordable residential units, 1,184-acres of industrial park, 641-acre of commercial area and other amenities/ infrastructure (government buildings, university, international golf & resort, etc). PDC has sold 400-500 acres of Batu Kawan industrial land at RM30psf  nd it has invited qualified companies to submit their request for proposal to build a premium outlet on a 40-acre piece of land in Batu Kawan. We believe that the ensuing economic activities following the improved connectivity to Penang Island will have a positive impact on the South Seberang Perai property demand and price. Tambun Indah, a Seberang Perai-based developer with over 540 acres of land bank in South Seberang Perai, is a good proxy to the South Seberang Perai property market. Over 2010-2012, Tambun Indah’s property sales and net profit had grown strongly, partly driven by the strong take-up for its Pearl City project a gated & guarded project in Simpang Ampat.