IJMLand oh IJMland by osk/rhb



IJM Land - Strong Earnings, Sales and Less Demanding Valuations

BUY
FAIR VALUE : MYR 3.76


IJMLD remains our top pick. We maintain our Buy rating with an unchanged fair value of MYR3.76. 4QFY13 results came in within expectations. Property sales in FY13 amounted to MYR2bn, beat market estimate by 15%. We expect sales to achieve MYR2.3bn in FY14, on the back of MYR3bn worth of launches. Announcement of new landbank acquisitions and JV deals will be the share price catalysts.

♦  In line. IJMLD’s 4QFY13 earnings came in within expectations. FY13 headline net profit was boosted by a MYR21m one-off gain arising from the disposal of Menara IJM Land in 1QFY13. Overall EBIT margin expanded to 24.5% from 21%, due to better product mix. Compared to 4 sen last year, a 5 sen (single-tier) dividend was declared for FY13.

♦  Property sales hit MYR2bn. FY13 property sales achieved MYR2bn, from MYR1.4bn in 9MFY13. All projects contributed to the amount, including MYR150m from Bandar Rimbayu, as signing of SPA takes time. As a result of strong sales, unbilled sales currently amounted to MYR1.8bn, increased from MYR1.4bn in 3QFY13. Our sales target for FY14 is now MYR2.3bn, on the back of MYR3bn worth of new launches. These include Rimbayu Phase 2, Pantai Sentral Park, serviced apartment at Jalan Raja Laut, and other projects in Penang, Seremban, JB and Kota Kinabalu. The Raja Laut high-rise project will have a GDV of MYR400m, and is expected to be priced at around MYR1,000 psf. We believe IJMLD will continue to do well in FY14, due to its wide range of property products in good locations that can satisfy local and foreign demand for properties.  

♦  Forecasts. No change to our FY14 earnings projection. We also introduce our FY15 earnings forecast with a net profit growth of 17%.

♦  IJMLD – our top pick. The stock remains our top pick for the sector. Compared to other stocks which have substantially been re-rated, IJMLD’s current valuations are relatively less demanding. We expect the management to close its JV deal to develop the commercial cluster in The Light Phase 2 over the next few months. Meanwhile, new landbank could also be the catalyst for share price performance. We maintain our fair value of MYR3.76, based on a 10% premium to RNAV. Maintain BUY.