Kimlun Corporation embarked on a strategic RM600 million joint venture with Astaka Holdings Ltd. to develop a premium serviced apartment project in Johor Bahru. The project, named Arden @ One Bukit Senyum, is set to bolster the group's construction and property earnings, positioning the company favourably in the regional property market says investment house Kenanga. The investment bank reports positively on the venture's potential contributions to Kimlun's profitability in their report today (July 15, Monday).

The house has maintained an OUTPERFORM rating on the group following the JV announcement. The bank highlights the project's favourable impact on its earnings outlook, forecasting sustained growth in construction revenue through contracts valued at approximately RM300 million. Despite recent share price appreciation, Kenanga has revised the target price upwards by 3% to RM1.81 (from RM1.76), factoring in enhanced earnings from the property JV and the company's robust order book in the construction sector.

The JV between Kimlun and Astaka Capital Sdn Bhd, a subsidiary of Astaka Holdings Ltd, involves developing 600 units of premium serviced residences across a 1.662-acre site near the Johor Bahru-Singapore rapid transit system (RTS) terminal. With unit prices ranging from RM1,300 to RM1,500 per square foot (psf), the project is scheduled for launch in the fourth quarter of CY2024, with completion expected within 48 months. The land acquisition cost of RM77 per square foot is deemed reasonable relative to prevailing market rates in the vicinity.

Kenanga said it underscores the group's strategic positioning as a beneficiary of public infrastructure projects and stable demand in Singapore's infrastructure sector, leveraging its precast concrete manufacturing capabilities in Johor. The company's robust construction order book of RM2.64 billion is expected to sustain operations over the next 2-3 years.