BIMB Securities maintains Buy on IJM Land, raises target price to RM3.50
Business & Markets 2013
Written by theedgemalaysia.com
Tuesday, 13 August 2013 08:38
KUALA LUMPUR (Aug 13): BIMB Securities Research has maintained its Buy rating on IJM Land Holdings Bhd at RM2.80 with a higher target price (TP) of RM3.50 (from RM3.42) after the company’s wholly-owned subsidiary, IJM PROPERTIES  SB had entered into a conditional share sale agreement with KEB Builders SB (KEB) for the acquisition of an additional 10% equity interest in Radiant Pillar SB (RPSB) for a total consideration of RM52.5 million.
In a note Tuesday, the research house said it was positive of the acquisition as it will allow the company to consolidate the results of RPSB (Bandar Rimbayu) via the increased equity interest from 50% to 60%.
The Bandar Rimbayu township is strategically located adjacent to matured neighbourhoods like Subang Jaya, USJ, Kota Kemuning, Kemuning Utama, Puchong, Shah Alam and Klang and is accessible via five major highways, it said.
BIMB Securities said the company’s net cash position would remain unchanged after the cash settlement of the acquisition (RM52.5 million), of which a 10% deposit had been paid to KEB with the balance is to be paid within 21 business days thereafter.
“We have revised our fair value upward slightly to RM3.50 from RM3.42 to reflect the additional 10% stake increment in Bandar Rimbayu.
“Maintain Buy. Our new TP has an implied PER of 18x based on FY14 earnings, which is relatively cheaper than IJM Land’s average peers PER of 20x,” it said.