Monday, December 2, 2013

IJM Land : 1HFY14 property sales up 39% YoY (CS)

IJM Land Berhad
Maintain OUTPERFORM
Price (25 Nov 13 , RM) 2.56
TP (prev. TP RM) 3.80 (3.80)
1HFY14 property sales up 39% YoY

● IJML’s 1H FY14 core net profit of RM150 mn (excluding a RM23 mn forex gain), up 98% YoY, was within expectation and made up 53% of consensus estimates. Property sales grew 39% YoY to RM1.25 bn with unbilled sales now standing at RM2.0 bn.

● Management remains confident that affordable properties (below RM1 mn), especially in the Klang Valley and Penang, will continue to sell well despite the measures announced during Budget 2014. We believe there is strong interest for IJML's key projects and estimate property sales (excl Royal Mint) to grow 37%, 13% and 10% in FY14, 15 and 16, respectively.


● 90% of the £200 mn Royal Mint phase 1 project in London (IJML stake is 51%) has been sold since launching at the end of September 2013. However, earnings from the project will only be recognised upon completion in 2017.

● Maintain OUTPERFORM. The tighter restrictions imposed on the property sector have significantly dampened sentiment and IJML now trades at an attractive CY14E P/E of 11.2x, a 29% discount to its historical average of 15.7x.

1H FY14 core net profit of RM150 mn
IJML’s 1H FY14 core net profit of RM150 mn (excluding a RM23 mn forex gain), up 98% YoY, was within expectation and made up 53% of consensus full-year estimates. The stronger earnings were driven by higher property sales and development margins which expanded 3.4 pp YoY to 26.8%.
Property sales up 39% YoY
IJML achieved property sales of RM1.25 bn in 1HFY14, up 39% YoY, with unbilled sales now standing at RM2.0 bn. Management remains confident that affordable properties (below RM1 mn), especially in the Klang Valley and Penang, will continue to sell well despite the measures announced during Budget 2014. We believe there is strong interest for IJML's key projects such as Pantai Sentral Park and Bandar Rimbayu and we estimate property sales (excl Royal Mint) to grow 37%, 13% and 10% in FY14, 15 and 16, respectively.

Royal Mint phase 1 90% sold
90% of the £200 mn Royal Mint phase 1 project in London has been sold since launching at the end of September 2013. IJML has a 51% stake in the project which will be a significant boost to property sales. However, the earnings will only be recognised upon completion in 2017. Current planning permissions for phase 2 (GDV of £200 mn) are for a 5-star hotel, service apartments and residential apartments, but given the strong interest, we understand that IJML could look to change the plans to build residential apartments.

Potential land sales from the Light phase 2 in FY15
Management is looking to form a special purpose vehicle (SPV) to jointly develop the hotel, convention centre and retail mall at the Light phase 2. The exercise could happen in FY15 and the company could recognise land sales for about 50 acres of land, out of a total 103 acres. IJML's land cost for the Light phase 2 is approximately RM130 psf while the current market prices for the land is closer to RM400 psf. We have not built the potential land sales into our earnings.

Maintain OUTPERFORM, CY14E PE at a 29% discount to historical average
Maintain OUTPERFORM. The tighter restrictions imposed on the property sector have significantly dampened the sentiment for the property developers. IJML has lost all of its post GE13 gains and now trades at an attractive CY14E P/E of 11.2x, a 29% discount to its historical average of 15.7x. We are positive on the prospects for IJML given the strong interest for its key projects and flexibility from its well-diversified 5,904-acre land bank.



Source/Extract/Excerpts/来源/转贴/摘录: CS-Research,
Publish date: 27/11/13

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