Buy (maintained)

Target price: RM3.77

IJM Land to jointly develop a 15-acre Segambut land with FCW Holdings Bhd.

IJM Land announced that the group had on Sept 19 entered into a shareholders’ agreement with FCW to form a 50:50 joint-venture (JV) company to undertake a mixed development project on four parcels of freehold land in Segambut, Kuala Lumpur.

The JV company had on the same day entered into two conditional sale and purchase agreement with FCW Holdings Bhd to acquire the four parcels of freehold land in Segambut (15.4 acres) for RM188mil or RM280 per sq ft (psf).

We are “neutral” on the JV and land acquisition – the acquisition price of RM280 psf is comparable with the RM270 psf paid by UOA Development recently for an 11-acre piece of freehold land in Jalan Ipoh but higher than the RM135 psf paid by Mah Sing for a leasehold land in Taman Wahyu.

IJM Land has yet to announce the detail development plan and project gross development value. Maintain “buy” with an unchanged target price of RM3.77.

No change to our earnings forecast for now, pending completion of the transaction and further details on the Segambut development project. IJM Land (alongside Sunway) is our top pick for the property sector.

We like IJM Land for its strong management, good brand equity, good geographical diversification, excellent product mixed, impressive 31% earnings compounded annual growth rate over financial years 2013 to 2016 (FY13-16E) and undemanding valuation.