SkyWorld’s latest land buy offers rich potential

PETALING JAYA: SkyWorld Development Bhd’s maiden venture into the luxury residential segment via a purchase of a three-acre piece of land in Mont Kiara, Kuala Lumpur, is viewed positively by analysts.

The property developer has proposed to acquire the land, which has a potential gross development value (GDV) of between RM800mil and RM900mil, for RM110mil.

The price of RM110mil translates to a land-to-GDV cost of 12% to 13%, consistent with the 11% to 15% range for SkyWorld’s past Klang Valley projects, said Phillip Capital Research.

Assuming an 80:20 debt-to-equity funding structure, the research house expects SkyWorld’s net gearing to increase to 0.3 times, from 0.15 times by the third quarter of this year.

The land offers strong appeal given its proximity to established commercial hubs and the research house views this acquisition positively,

Phillip Capital Research maintained its “buy” call on the stock with a lower target price of 84 sen.

It also trimmed its earnings forecasts for SkyWorld for 2026 and 2027 by between 2% and 3% to account for increased interest costs following the land acquisition, with revenue generation expected to begin in 2028.

The research house also factored in a higher revised net asset value discount of 40% from 30% previously, to reflect heightened uncertainty amid rising macroeconomic risks, which could dampen consumer spending and weigh on property demand.

The research house said the key risks to its recommendation include lower-than-expected property sales and higher building material prices.