MIDF Investment Bank (MIDF), in its Malaysia Market Update today (Wednesday), upgraded UOA Development Berhad (UOAD MK) to BUY following a positive assessment of its recent developments and prospects.

The House visited Bamboo Hills, noting a robust hospitality segment with significant income contributions, bolstered by its strategic location and diverse tenant mix including Starbucks and Hanam BBQ, among others. The property's popularity as a dining destination enhances rental stability, crucial for UOA Development's earnings from investment properties, which contributed RM77 million in 1QFY24.

Furthermore, UOA Development is set to launch Bamboo Hills Residences in July, a transit-oriented development linked to the Kentonmen MRT station, with promising early booking rates of nearly 70% for Tower A. The project's affordable pricing and prime location are key factors attracting buyer interest.

Despite recent fluctuations, UOA Development recorded RM121 million in new property sales in 1QFY24, driven by projects like Aster Hill and ongoing developments in prime areas like Bangsar South. The uptick in project launches aligns with improving market conditions, strengthening its sales outlook moving forward.

Given these developments, MIDF revised UOA Development's target price to RM2.06, up from RM1.93, reflecting improved sales prospects and a narrowed RNAV discount. The upgrade to BUY underscores MIDF's confidence in UOA Development's trajectory amidst stable earnings from its investment properties and an attractive dividend yield of 5.3%.