TPLP set to unlock value with One Hoshang, Mangrove projects

December 22, 2023 (MLN): TPL Properties Limited (PSX: TPLP) is poised for a significant value unlock as it advances toward the successful completion of its ambitious projects, One Hoshang and Mangrove, as revealed in a report issued by KASB Securities.

TPLP is one of the two real estate companies listed on PSX, which provides direct exposure to the real estate sector of Pakistan.

Currently, the company’s model is based on income streams from development advisory, REIT management, fund management, property management, and return on investment in REIT.

According to K Trade, the company's diversified and stable income streams, coupled with upcoming projects in the pipeline, TPLP is set to witness a transformation.

Currently, the stock trades at a Price-to-book (P/B) value of 0.52, representing a discount of 44% to its 3-year average PB. Additionally, TPLP’s Book Value (BV) is twice the current price.

Based on the management’s disclosure and estimates, the target price is three times the current price, subject to the completion and sale of its upcoming projects including One Hoshang, Mangroves, and Technology Park for 10 - 15 years.

However, based on K trade’s calculation the price is targeted at Rs22.6 per share with an upside of 84%.

Additionally, these projects are expected to increase the NAV by Rs55.5/unit (One Hoshang: Rs3.5/unit, Mangroves: Rs52/unit).

K Trade is focusing on the following projects that are anticipated to elevate the company's potential:

Establishment of REIT Fund I

The Fund’s NAV has increased to Rs32.4bn in the recent quarter. This represents a growth of 76% since incorporation, outpacing growth statistics from Zameen.com.

However, this increase is not yet reflected in the stock’s performance.

“We think that visibility and substantial progress of its upcoming projects including, One Hoshang, Mangroves and Technology Park, would unlock the valuations of the company,” it further added.

One Hoshang – Expected to be completed by FY26

The One Hoshang project stands out for its prime location in Karachi. Considering unique designs and notable amenities, these apartments would trade at a higher premium compared to conventional apartments.

Mangroves – Key value contributor to TPLP’s success

The project is set to become one of the city’s most desirable neighborhoods, overlooking the expansive mangrove forest and seafront, with world-class amenities. The project is expected to add more than 12 million sustainable real estate space to Karachi’s skyline and is the key contributor to TPLP’s success.

TPL Investment – Exploring the global hospitality segment

TPL Investment provides a valuable source of dollarized income stream for the company.

This diversification provides a hedge against factors impacting the Pakistani hospitality sector, such as real estate taxation and currency depreciation.

Additionally, a USD-denominated fund can mitigate currency risks, particularly relevant given the recent volatility of the Pakistani rupee and its significant impact on TPLP's earnings (95% YoY EPS reduction in the last quarter).

Venturing into Tower business

TPLP is all set to launch the Digital Infrastructure REIT Fund to facilitate the transaction of selling and leasing back 10,500 cellular mobile towers from Deodar (a Tower subsidiary of PTMC).

The combined synergy of TASC and TPLP will improve the tenancy ratio and IRR which would increase the fund’s NAV and thus management fees of TPL RMC.

Moreover, the partnership may further consolidate tower assets across the country and internationally through its Abu Dhabi subsidiary.

TPL RMC – TPLP’s cash cow

RMC is in discussions with various land bank owners to structure their real estate asset developments under a REIT structure, expanding its AUMs and income stream.

The entity believes that the stable nature of recurring REIT management fees has enabled TPL RMC to provide healthy dividends to its parent company (FY23: Dividend of PKR 100mn paid by TPL RMC).

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