Broker's take: RHB issues 'buy' on Aspen

RHB has issued a "buy" call on Malaysian-based property development group Aspen (Group) Holdings, citing its strategic relationship with Ikea's South-east Asian franchisee as a key growth factor.

Aspen last traded at S$0.22, and RHB's target price of S$0.31 represents a 41 per cent upside on the stock.

One of the reasons RHB is initiating coverage on Aspen is because it is an early mover in the emerging Batu Kawan market in Penang with its flagship Aspen Vision City (AVC) project. This mixed-use property project is jointly developed with Ikano, which owns the franchise rights to operate Ikea stores in South-east Asia.

Additionally, Ikano will be opening northern West Malaysia's first Ikea store within AVC, which RHB expects to be a re-rating catalyst for property prices and demand.

"Based on past observations, the opening of Ikea outlets in Malaysia has boosted population density, property demand and real estate values in the surrounding areas. We expect a similar effect on Batu Kawan property prices once the store opens," the broker said.

RHB also noted that Aspen is able to differentiate from its competitors on three fronts: by being an early mover in affordable housing, offering value-added packages such as fully-furnished homes and featuring smart services.

However, key risks include Penang's market concentration, Aspen's execution ability and a high reliance on the Ikea partnership.

Aspen has four ongoing launched projects in Penang and three more in its pipeline.