Wednesday 20 June 2012

IGB Corporation - 500,000sf of mixed commercial project in Jakarta BUY


- Following our conversation with the management, the following are more details on the land deal in Indonesia:-

- (1) The land is located nearby University Kristen Krida Wacana – a private university – within Petamburan, which boasts several main universities of Jakarta. We gather the price of the land was within the recent transacted prices. 

- (2) The development’s estimated GDV is US$65mil (RM205mil) and will have a GFA of 900,000sf (NSA of 500,000sf) with 700 car parks. 

- Given the location, it is not a surprise that 300,000sf will be allocated for student accommodation and some retail properties. Meanwhile, 200,000sf would be utilised for an office tower and a 3-star hotel with 500 rooms. Not surprisingly also, the office would be sold, and we would expect the hotel to be a platform for IGB to expand its St Giles brand into Indonesia. 

- (3) Management targets to start construction of the development by the end of this year.

- Based on the figures given, the development would have a marginal impact – ~5% uplift – to our NAV estimate due to the small development value and the 58% stake in the JVCo.

- On the flipside, this would cap IGB’s risks of entering into a new market, while possibly provide as a platform for the group to penetrate the Indonesia market.

- However, going forward, this could be the start of some exciting land deals to be made by IGB; recall that we had highlighted earlier that the group was eyeing other overseas developments, namely in London and Taipei. 

- We reaffirm our BUY rating on IGB Corporation (IGB) with our fair value kept at RM3.50/share based on a 22% discount to its NAV of RM4.50/share.

Source: AmeSecurities

No comments:

Post a Comment