IJM Land - New sales of RM1.4bil already Buy

- We reaffirm our BUY rating on IJM Land, with our fair value unchanged at RM3.80/share, assigning a 10% discount to our estimated FD NAV of RM4.20/share.

- IJM Land reported a 3QFY13 net profit of RM53.6mil, bringing its 9MFY13 earnings to RM149.7mil. This is largely in-line with our, and street’s estimates, covering about 70% of full-year earnings. No dividend was declared for the quarter.

- The group’s 9MFY13 earnings grew by 9% to RM149.7mil on the back of a 4% jump in turnover with EBIT margin improving to 25% vs. 21% in the previous year, due to a better product mix. Meanwhile, earnings grew by 19% QoQ, boosted by some disposals of commercial land within its existing townships.

- Going forward, IJM Land’s earnings would be supported by healthy unbilled sales of RM1.4bil (1.3x FY12’s property turnover). We also understand that in 3QFY13 alone, IJM Land managed to secure some RM500mil in new sales – driven by strong demand for its projects mainly Permas Jaya, Seri Riana and Light Collection 3. This brings its 9MFY13 new sales to RM1.4bil which is already on par with the total sales last year. We expect the group would generate about RM1.8bil of new sales for FY13F.

- IJM Land has opened Bandar Rimbayu development for a soft launch recently. Official launch would be done soon and as we have mentioned previously, response for the maiden 526 units has been overwhelming. We understand prices have edged closer to the RM700k- mark for an intermediate terrace unit.

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

Source: AmeSecurities