SBC Corp set to catch investors eye

PETALING JAYA: SBC Corporation Bhd, the contractor-turned-developer that has been focusing on the Kota Kinabalu property market over the past decade, is expected to grab the eye of investors, given its rising number of property launches in the Klang Valley in recent years, said CIMB Research analyst Nigel Foo.
"SBC is a household name in Sabah but has a low brand profile in the Klang Valley. But we believe that it is only a matter of time before investors grasp SBC's potential," Foo said in the research report yesterday.
The Bursa Malaysia-listed SBC has a current unbilled sales of RM200 million and should see a major boost by end of this year, he said, mainly from its new project launches, including the Jesselton Quay development and the Kiara East project, both carry a gross development value (GDV) of RM500 million each.
SBC has property projects in both Peninsular and East Malaysia, and is currently working on five property projects, which offer combined GDV of RM6.2 billion over the next 10 years.
"We are particularly excited about the RM1.8 billion Jesselton Quay development, an integrated seafront project in Kota Kinabalu, backed by the Sabah state government," said Foo.
According to him, SBC is now waiting for final approvals from the state government before it launches the first phase of commercial units. The property firm should get the nod soon, he added.
Jesselton Quay is a joint venture between SBC and the local-listed port operator Suria Capital Holdings Bhd. According to a filing with Bursa Malaysia, SBC Corp incorporated Jesselton Quay Properties Sdn. Bhd yesterday.
Commenting on the shares of SBC, Foo said the under-researched small-cap property counter is trading at only 5.6 times of its price-earnings ratio (P/E), as well as a massive discount of 72% to its revalued net asset value (RNAV) of RM6.60 apiece.
However, he opines the discount should narrow as more investors wake up to the potential of SBC's projects in the Klang Valley and Kota Kinabalu, Sabah.
In addition, share price of SBC could be catalysed by the start of the Jesselton Quay JV project.
CIMB Research begin its coverage on SBC with an 'add' rating and a target price of RM3.96.
Among the property stocks under the research house's coverage, Foo highlighted that SBC has the highest GDV/market cap ratio of 21.1 times, followed by Eastern & Oriental Bhd's 16 times.
"We believe that this shows that the stock has potential value to be unlocked," he said.