SD Guthrie poised to unlock RM1.3bil profit from land monetisation strategy

New Straits Times

28-06-2025

KUALA LUMPUR: SD Guthrie Bhd is set to further accelerate its industrial park development strategy, following a series of joint ventures, memoranda of understanding (MOUs), and land sale agreements covering over 2,387 hectares at key locations across Malaysia over the past year.
Analysts said these initiatives reflect the group's strategy to unlock value from its extensive land bank while supporting national objectives to attract investment, generate employment, and promote sustainable industrial growth.
"SD Guthrie holds vast tracts of plantation land across the country. By converting selected parcels into industrial developments, it is able to monetise idle assets, enhance income potential, and improve capital efficiency," said an analyst who spoke on condition of anonymity.
He noted that joint venture-led projects, in particular, provide recurring income streams and represent a significant step towards diversifying the company's earnings beyond its core plantation operations.
With rising demand for industrial space driven by e-commerce, manufacturing, renewable energy, and logistics, SD Guthrie is strategically aligning its projects with government-backed corridors such as Malaysia Vision Valley 2.0 (MVV 2.0) and the port-centric development of Carey Island.
SD Guthrie's latest deal, inked on June 24, 2025, involves a 242 ha industrial project within the company's Sengkang Estate in Port Dickson with Negeri Sembilan Menteri Besar Incorporated (MBINS). The two agreements signed with MBINS form the first two phases of the Port Dickson Free Zone (PDFZ), a flagship initiative under the MVV 2.0 development corridor.
The PDFZ will eventually span 574 ha and include warehouses, logistics hubs, manufacturing facilities, and essential infrastructure. Strategically located next to Tanco Holdings Bhd's upcoming Smart AI Container Port (Midport), the development is set to enhance Negeri Sembilan's position as an emerging logistics and maritime hub.
The master plan is expected to be finalised by the first quarter of 2026, with development works commencing in the second quarter.
According to CIMB Securities Sdn Bhd, the project benefits from strong road connectivity via the Seremban–Port Dickson Highway and the Port Dickson–Linggi network, both of which link to the North-South Expressway.
"This offers seamless access to MVV 2.0, the primary economic corridor on the west coast of Peninsular Malaysia. The deal allows SD Guthrie to immediately monetise part of its land while securing a future recurring income stream," it said in a note.
Just days earlier, SD Guthrie also announced a major collaboration with Sime Darby Property to co-develop up to 809 ha in Carey Island, equivalent to about 7 per cent of its 11,592 ha landholding there. The project will be undertaken via a special-purpose vehicle (SPV) aimed at supporting the Selangor state government's vision to transform Carey Island into a key industrial and logistics hub.
"The development will co-exist with the island's integrated palm oil operations and complement activities at Westport and Northport in Port Klang. While the JV's shareholding structure has not been disclosed, the companies confirmed that PNB will nominate the chairman of the newly formed SPV. SD Guthrie currently owns 79 per cent of Carey Island, or approximately 11,592 ha," CIMB noted.
In May 2025, SD Guthrie formalised another key JV with Eco World Development Group Bhd and Negeri Sembilan Corporation (NS Corp) to jointly develop 483.6 ha in Mukim Jimah. SD Guthrie will retain a 30 per cent stake in the RM2.95 billion GDV project, with the land transacted at RM11 per sq ft.
Beyond the Klang Valley and central region, SD Guthrie is also expanding in the southern and northern states. In November 2024, it partnered with AME Elite Consortium Bhd to develop a 259 ha green industrial park in Kulai, Johor, featuring a dedicated solar park. In Negeri Sembilan, the company has partnered with TH Properties for a 187.7 ha industrial project in Bukit Pelandok, valued at RM220 million or RM10.89 per sq ft.
Meanwhile, in May 2024, SD Guthrie and PNB launched the 404.7 ha Kerian Integrated Green Industrial Park (KIGIP) in Perak. Supported by a 267 ha solar farm, KIGIP is set to become one of the largest integrated green industrial zones in northern Malaysia.
CIMB noted that the earnings impact from these initiatives will depend on how quickly SD Guthrie can obtain necessary approvals, execute land launches, and begin generating income.
"Assuming all seven MoUs and agreements signed result in an average land sale price of RM10 per sq ft, we estimate total land sales proceeds could reach up to RM2.57 billion for 2,387.6 ha of land," it said.
With a low land cost base, a 30 per cent retained stake in joint ventures, and a 24 per cent corporate tax rate on disposal gains, SD Guthrie could realise profits of up to RM1.3 billion, well above its RM500 million annual land sales target.
CIMB reiterated its 'Hold' rating on SD Guthrie, maintaining a sum-of-parts-based target price of RM5.06 per share.
Kenanga Research projects the gross development value (GDV) of SD Guthrie Bhd's Port Dickson property venture to be between RM1 billion and RM3 billion, with the development potentially stretching over five years or more.
Despite this, the research house is keeping its earnings forecasts for FY2025 and FY2026 unchanged, noting that SD Guthrie had earlier guided for RM500 million in land disposal gains this year, a figure already incorporated into its estimates.
"Year-to-date, SD Guthrie has accumulated about RM300 million in land disposal gain from concluded projects. Hence, there is still about RM200 million in headroom from the guided RM500 million disposal gain for this year. For FY 2026, we are raising our earlier gain of RM50 million to RM200 million. However, we are leaving the FY 2025 to FY 2026 forecast core net profit intact," it said.
Kenanga has maintained its "Market Perform" rating on SD Guthrie, with a target price of RM4.60.
The research house highlighted several risks to its outlook, including continued Western scrutiny of palm oil over sustainability and biodiversity issues, weather disruptions, labour shortages, soft commodity prices, and rising operating costs.
Kenanga also views the group's strategic expansion into industrial property development as a long-term positive, with the potential to boost return on equity (ROE). However, it cautioned that these benefits may take time to be realised due to execution challenges.
"SD Guthrie is defensive and assets rich but earnings growth is modest and extra dividends from disposals may be expected," it said.