May 30, 2011

IJMLAND - IJM Land - right on target

Stock Name: IJMLAND
Company Name: IJM LAND BERHAD
Research House: AMMB

IJM Land Bhd
(May 30, RM2.80)
Maintain buy at RM2.80 with fair value of RM4
: We reaffirm our 'buy' rating on IJM Land with our fair value unchanged at RM4, based on an unchanged 10% discount to our fully-diluted net asset value (NAV) estimate of RM4.46.

IJM Land's 4QFY11 net profit came in at RM44 million, bringing its full-year earnings to a record RM218 million (two times FY10), meeting our bullish estimate but way ahead of consensus' by 25%. This underscores our strong belief in management's delivery capabilities. The company announced a dividend of four sen per share (FY10: two sen per share).

Although earnings were against the preceding quarter, this was due to the lumpy recognition of the earlier sale of the Aeon Mall in Melaka.

Our earnings estimates for FY12F and FY13F remain largely unchanged at RM285 million and RM314 million. Earnings will be underpinned by strong unbilled sales of about RM1 billion and a new sales assumption of RM1.5 billion over RM1.5 billion to RM2 billion of planned launches for FY12F. We introduce our FY13F earnings at RM340 million, representing 8% year-on-year growth.

The group plans to launch RM1.5 billion to RM2 billion worth of properties ' including Light Collections 3, The Address. New sales remain solid, amounting to RM450 million in the first three months of CY11. We believe the group would be able to register stronger sales against last year's robust RM1.5 billion.

IJM Land is moving to capitalise on the maturity of its Seremban II township by divesting 15 to 20 acres of commercial land to Mydin hypermarket. This should accelerate the development potential of the remaining 300 acres of commercial land.

Infrastructure and earthworks for its 50%-owned Canal City (1,877 acres) are slated to start soon. Acquired for about RM50 psf, Canal City is scheduled for launch in 2012 to take advantage of the lack of affordable landed homes priced below RM350,000 in the suburbs.

IJM Land's valuations are very attractive ' trading on forward multiples of 11 to 13 times over FY12F to FY14F, and a 37% discount to fully-diluted NAV. Despite its deep value, IJM Land's share price needs to get a kick from a meaningful land deal to reinvigorate excitement over the stock. This may soon take place. ' AmResearch, May 30


This article appeared in The Edge Financial Daily, May 31, 2011.

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