Cheers for KLK's foray into tech hub development
KLK TechPark Launches with Automotive Focus
Last Friday marked the launch of the KLK TechPark, a new development that is set to bring significant changes to Malaysia's tech and manufacturing sectors.
The property segment currently accounts for only 1% of KLK's group earnings, but with the launch of the KLK TechPark, the company aims to expand its presence in the property market. The stock closed 12 sen or 0.6% higher today at RM20.08, valuing the group at RM22.41 billion.
The KLK TechPark's Phase 1 has Chinese automotive giant BYD as the anchor investor. BYD has already purchased 150 acres for its first assembly plant in Malaysia, which is scheduled for completion by the end of 2026.
In a move to further strengthen the tech park's focus on the automotive and manufacturing sectors, KLK Land has announced the construction of a 200-acre vendor park for Phase 2 of the KLK TechPark in Tanjong Malim. This vendor park is aimed at attracting automotive and manufacturing players and is scheduled for launch by the end of 2025.
The KLK TechPark is expected to generate a gross development value of RM3.5 billion over the next decade. The property division of KLK anticipates expanding its portfolio beyond Bandar Seri Coalfields in Sungai Buloh, suggesting that more developments are on the horizon.
Analysts are optimistic about the KLK TechPark's potential impact on the company's earnings. PublicInvest estimates the project could potentially contribute an additional 3%-5% to KLK's FY2026-2027F earnings forecasts. RHB Research is upbeat on KLK's technology park as it provides a long-term growth driver for its property division.
The land for the KLK TechPark could command a premium above the RM45 per sq ft assumption due to its direct access to the North-South Expressway and proximity to the Automotive High-Tech Valley. Immediate profit contributions from the land sale to BYD are expected to range from RM100 million to RM120 million.
The family of executive chairman Lee Oi Hian controls KLK via its majority stake in Batu Kawan Bhd, which has a 48% stake in the group. KLK, one of Malaysia's largest plantation companies, has about 300,000ha of planted area for oil palm and rubber across Malaysia, Indonesia, and Liberia.
The KLK TechPark is set to be a significant addition to Malaysia's tech and manufacturing landscape, with its focus on the automotive sector and its strategic location. As the project progresses, it is expected to attract more investors and contribute positively to KLK's earnings.
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