IJM Land (Inter-Pacific Research) outperform; target price RM2.83

Sustainable revenue growth
Highlights:

•  Outperform: IJM Land currently sits on a well diversified landbank of 7446 acres with a gross development value (GDV) of RM24.0bn. We are recommending Outperform with target price of RM pegged by EPS of 17.7sen and forward PER of 16X.

•  4QFY10 top line growth by 8.7% y/y to RM245.7mn: It was mainly attributable to better sales mix achieved in the Group’s on-going projects. Current on-going projects include Bukit Mandarina, Sh’ng Villa and Riana Green East while township projects such as Seremban 2, Shah Alam 2, Nusa Duta@Johor and Bandar Utama@Sandakan would provide stable source of revenue.

•  YTD PBT increased by 118% y/y to RM148.9mn: Increase in PBT was a result of better revenue recognition and stable building materials cost. PBT margin improved, notwithstanding a one-off gain from the disposal of Tesco land & building in Penang recognised in 2QFY09.

•  Flagship project in Penang and Johor: Growth driver for IJM Land will be their Penang project ‘The Light’ which is expected to size up their total GDV of RM5.2bn. Residential portion had been launched in phases. The residential component (42ac; RM1.2b GDV) has already been reclaimed and launches have commenced. Two of the residential  components, The Light Linear and The Light Point with combined initial GDV of RM300mn enjoyed robust sales since launching.

The light linear had achieved a take up rate of more than 85%, while The Light Point enjoying more than 70%. Sebana Cove is another high-end integrated development with total GDV of RM1.4bn in Johor looking to ride on the development of Johor State which is spurred by the IDR activities.