KUALA LUMPUR (Feb 4): Lagenda Properties Bhd is poised for an earnings acceleration over the next two years, driven by robust demand for affordable homes, according to research house CGS International.
The analyst noted that Lagenda’s net profit margins, already above the sector average, could expand gradually to 19% by 2027, supporting a potential increase in the company’s valuation multiples. CGS International initiated coverage on the developer with a ‘buy’ rating.
“We see Lagenda entering a renewed earnings growth phase, which should act as a catalyst for multiple expansion,” the research firm said.
Lagenda shares have gained around 20% in January 2026, though they have yet to recover fully from a sharp decline in 2024 linked to an investigation involving a senior executive over the subdivision of Malay reserve land in Manjung, Perak. The investigation’s outcome remains unresolved.
Despite this, Lagenda commands buy recommendations from three other research houses, with CGS International’s target price of RM2.03 representing the highest in the consensus, nearly 25% above the sector average. At its last traded price of RM1.50, Lagenda is valued at six times forward earnings, significantly below the domestic sector average of 13 times. The projected return on equity of 19% further underscores the stock’s attractiveness.
“This discount reflects the market’s limited recognition of Lagenda’s potential new earnings upcycle,” CGS International said.
Lagenda primarily develops affordable homes priced mostly below RM300,000. New home sales are projected to reach RM1.78 billion by 2027, representing a three-year average annual growth rate of just over 16%, driven by new townships and residential projects.
Growth is expected across multiple states, including Perak, Selangor, Pahang, and Negeri Sembilan, with particularly strong traction in Johor, especially Kulai, supported by rising economic activity linked to the Johor–Singapore Special Economic Zone.
Margin expansion is expected to benefit from economies of scale, operating leverage, and a more favourable project mix.
The developer’s earnings momentum also signals broader opportunities in industrial land in Selangor, factory developments in Puchong, and industrial property in the Subang area, where rising residential and commercial activity can stimulate demand for supporting infrastructure and facilities. Strong affordable housing growth may also boost demand for commercial property in KL and office space in Bukit Jalil, as new townships attract businesses and services to meet community needs.
Singapore