Monday, 4 March 2013

IJM Land - Bandar Rimbayu off to a roaring start BUY

- We maintain our BUY rating on IJM Land, with our fair value maintained at RM3.80/share, assigning a discount of10% to its estimated FD NAV of RM4.20/share.

- IJM Land launched its much-awaited Bandar Rimbayu project over the weekend.

- Phase 1, called Chimes, consists of 526 link units to be built on 56 acres of land. It comes with two sizes – i.e. 22’x75’ and 24’x75’ – with prices starting from RM580,000 and RM640,000 respectively.

- The project was off to a roaring start, with all of the nonbumiputera units on offer fully-taken up. Over 3,000 attended the balloting exercise held during the weekend.

- We are not unduly surprised by the strong-take up, given that Chimes had already garnered over 16,000 registrants prior to its debut.

- Judging by the strong response for Chimes, we would not be surprised if IJM Land accelerates the launch of Phase 2 in about four months’ time.

- We understand that Phase 2 (roughly 500 units) would offer colonial-styled link homes that are slightly larger in built-up (22’x75 and 24’x80’). With the strong take-up, we expect prices to trend higher.

- Work on a clubhouse is set to start by the middle of this month at an estimated cost of RM40mil.

- The successful launch of Chimes would further underpin IJM Land’s strong sales pipeline. For the 9MFY13 period, new sales have already reached RM1.4bil – already on par with the total sales last year.

- We are therefore assured that the group would meet our FY13F new sales target. This is supported by healthy unbilled sales of circa RM1.4bil.

- We expect Bandar Rimbayu to be self-sustaining, providing annual recurring sales of over RM1bil when this green township matures – similar to what S P Setia has enjoyed with its highly-successful Setia Eco Park development.

- From a valuation standpoint, IJM is currently trading at a steep 49%-discount to its estimated FD NAV. While sales are still strong with exciting projects in the pipeline, we expect the stock to trade sideways amid election risks.

Source: AmeSecurities

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