IJM Land - Bandar Rimbayu to be unleashed soon Buy

- We reaffirm BUY on IJM Land, but tweaked fair value to RM3.80/share (RM3.70/share previously) based on a 10% discount to our revised FD NAV estimate of RM4.20/share (RM4.10/share previously). Our NAV estimate is revised as we rolled forward our valuation to FY13F. Our rating is maintained to reflect the deep discount of 51% to its NAV estimate.

- IJM Land reported a net income of RM56mil for Q4FY12, bringing its FY12 earnings to RM194mil. This is largely inline with our, and consensus, estimates – +4% above our and -2% below streets forecasts, respectively. 

- In hindsight, earnings dropped by 11% YoY, but taking into account the gain from the sale of Aeon Malacca land last year of RM63mil, net income actually rose by 25% YoY. However, sequential growth was flat (+1%) despite having seen turnover jumping by 25%. This was largely due to a higher-than-expected tax rate – 35% versus 25%.

- In terms of new sales, IJM Land managed to equal FY11’s numbers at RM1.36bil. This was after generating RM450mil in new sales for the last quarter, which was largely driven by sales in Penang, i.e. Address and Vertiq – accounting for RM120mil.  

- The group is now looking at about RM1.5bil of new sales from the RM2.5bil planned launches for FY13F. Sales would be driven by:- (1) Bandar Rimbayu and Siri Riana in the Klang Valley; (2) The Light Collection 3 & 4 in Penang; (3) Sabah projects and (4) Seremban 2 and Johor projects.  The group may be able to surpass its target given the expected strong take-up on Bandar Rimbayu (formerlyknown as Canal City).

- Newsflow on Bandar Rimbayu is gaining traction with the maiden launch slated for Q42012. The first phase will comprise about 530 units of link houses to be priced at about RM500k per unit. We are not surprised that response – with over 2,000 bookings - has been strong, and we believe the group would be able to generate at least RM600mil in yearly sales from this development alone.

- On the flipside, Sebana Cove will be the key project for FY14F, to be driven by Petronas’ oil & gas hub at the southern tip of Johor. Although it is still on the drawing board, we understand the management has been meeting Petronas on a regular basis to finalise its development plans.

- IJM Land remains attractive with a steep discount of 51% to its NAV estimate. We expect the discount to narrow as sales for Bandar Rimbayu pick up.   

Source: AmeSecurities