Company Result 26 November 2014

Transcription

1 MALAYSIA INVESTMENT RESEARCH REPORT KDN PP13226/04/2014 (032022) JF APEX SECURITIES BERHAD (47680-X) Company Result 26 November 2014 IJM Land Disappointing 1HFY15 HOLD Maintained Share Price Target Price RM3.32 RM3.55 Company Description IJM Land Bhd is an investment holding company. The company, through its subsidiaries, operates in property development and management, hotel and recreation club. Stock Data Bursa / Bloomberg code 5215 / IJMLD MK Board / Sector Main / Property Syariah Compliant status Yes Issued shares (m) Par Value (RM) 1.00 Market cap. (RMm) week price Range RM Beta (against KLCI) m Average Daily Volume 1.25m 3-m Average Daily Value^ RM4.14m Share Performance 1m 3m 12m Absolute (%) Relative (%-pts) Major Shareholders % IJM Corp Bhd 64.2 GIC Private Limited EPF Historical Chart Source: Bloomberg Lee Chung Cheng , ext. 758 cclee@jfapex.com.my Result Comment IJM Land s (IJML) 2QFY15 core net profit stood at RM77.1m (after stripping off unrealized forex gains and losses in this quarter and previous quarters), up 3.4% qoq and flat yoy. Meanwhile, revenue registered at RM465.5m, marginally decreased by 1.3% qoq but surged 9.2% yoy. Result was below expectations. IJML s 1HFY15 core net profit of RM152m accounted for 39% of our and 41% of consensus full-year estimates. We believe the lower-thanexpected core net profit was mainly due to lower progress billings for its property development and higher costs incurred for its hotel operations in this quarter. Lower yoy results dragged down by higher operating expenses. Despite achieving higher revenue (+5.8% yoy) for its 1HFY15 results, the Group s core net profit was flat (- 0.7 yoy), mainly caused by higher marketing expenses and start-up costs of new projects which we believe are Pantai Sentral Park and Sebana Cove, coupled with losses in its hotel operations. Going forward, we expect the Group to achieve better 2H driven by higher progress billings for its property projects such as Bandar Rimbayu and Shah Alam 2. Topline underpinned by healthy unbilled sales. The Group s unbilled sales stood at RM1.8 billion as of 2QFY15 which will sustain its earnings over the next 1 year. New sales wise, we envisage that IJML could have difficulty reaching our full-year sales forecasts of RM2.5b or beat last year s sales of RM2.2b even after anticipating more new launches in 2HFY15 since new sales of RM720m thus far accounted for only 29% of our full-year estimate. Good response for its latest offerings. Recent launches of the Group enjoyed healthy take-up rate albeit the property market is currently undergoing consolidation mode. We understand that the recent launch of 45 non-bumi units for Bandar Rimbayu Phase 4 Scarlet (total of 110 units of double storey link houses with starting price of ASP of RM350psf) were 70% booked. Meanwhile, the Pantai Sentral Park Phase 1 Inwood Residence which was launched in August also enjoyed healthy bookings of over 70% (over 200-unit serviced apartment with built-up sizes of 1230sf at ASP of RM psf). Slew of new launches in the pipeline. The launch of highly-anticipated Sebana Cove project in Pengerang in coming months, initial launch of bungalow units with pricing over RM1m, and The Light s commercial development in Penang shall further boost the Group s new sales in 2HFY15. Please read carefully the important disclosures at end of this publication

2 Earnings Outlook/Revision We cut our FY2015F and FY2016F core net earnings forecasts by 12% and 14% to RM344.7m and RM434.2m respectively after lowering our new sales estimates from RM2.5b to RM1.8b for FY15 and RM2.8b to RM2.2b for FY16 as well as our operating margin for FY15. Valuation & Recommendation Maintain HOLD with unchanged target price of RM3.55 which is in line with the privatization offer price. The offer price implies c.14% discount to our RNAV/share of RM4.12. Limited upside as offer price renders c.7% upside against current closing. Despite the Group s strong branding, good corporate governance, stellar earnings growth, and well diversified in respect of product offerings and project locality, we view the stock unappealing with the privatization offer constitutes smaller cash portion and share swap to IJM Corp, i.e. 20 sen cash and 0.5 new IJM Corp shares at RM6.70. Figure 1: Quarterly Figures Year to 31 March (RMm) 2QFY15 1QFY15 2QFY14 qoq (%) yoy (%) 1HFY15 1HFY14 yoy (%) Turnover Operating profit Pre-tax profit Net profit Core net profit Operating margin (%) / ppt PBT margin (%) / ppt Figure 2: Financial Summary Year to 31 March (RMm) FY12 FY13 FY14 FY15F FY16F Revenue Operating profit Net profit Core net profit EPS (sen) P/E (x) Price/NAV (x) Dividend per share (sen) Dividend yield (%) 1.20% 1.51% 1.81% 2.11% 2.41% PBT margin (%) 23.38% 25.60% 34.26% 23.47% 24.56% Net Gearing (%) -9.10% -3.09% 5.58% -0.56% -9.02% ROE (%) 7.82% 7.98% 14.96% 9.01% 10.52% Source: Company, JF Apex 2

3 Figure 3: RNAV Projects Description Remaining Remaining Years to size GDV (RM (acres) m) develop Equity 9.5% Interest (%) (RM m) Northern Region Permatang Tinggi development % 39.5 Jelutong development % Jelutong development % 66.3 Bukit Jambul Residential % 9.3 Central Region Bukit Manda'rina development % 69.1 Laman Granview Residential % 52.6 Jalan Raja Laut Commercial % 58.9 Shah Alam 2 development % SS2, PJ Commercial % 3.3 Segambut land development % Kerinchi/Pantai Dalam % Seremban/Melaka S2 Township development % 80.2 S2 CC development % 8.9 S2 Heights development % Lagenda, Melaka Sentral Commercial % 6.3 Southern Region Suria Bistari/Suria Heights Residential % 14.4 Mount Austin development % Sebana Cove development % Nusa Duta development % 35.4 Permas Jaya Apartment % 19.6 Nasa Land % Eastern Region Bandar Utama, Sandakan development % Bandar Utama, Sandakan development % 31.8 Bandar Indah, Sandakan development % 54.6 Mile 3.5, Jalan Tuaran, KK Condominiums % 29.6 Jalan Sibuga, Sandakan development % 70.8 Yen Yen Park, Kuching Residential % 2.8 Kuching Riverine development % 22.4 Central Region - JV Bandar Rimbayu development % Serenia Garden (Ukay Green) Residential % 33.8 Sh'ng Villa (Pandan Bistari) Residential % 41.3 Seri Riana Residence, Wangsa Maju Residential % 48.8 UK Royal Mint Street project development %

4 Total 2,708.9 Unbilled sales net of tax Market Investment Properties NBV Value Hotel Shareholders' fund (as at 4QFY14) RNAV Enlarged shares (m) RNAV per share (RM) 4.12 Discount 10% Fair Value per share (RM)

5 JF APEX SECURITIES BERHAD CONTACT LIST JF APEX SECURITIES BHD 6 th Floor, Menara Apex Off Jalan Semenyih Bukit Mewah Kajang Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) PJ Office: 15 th Floor, Menara Choy Fook On No. 1B, Jalan Yong Shook Lin Petaling Jaya Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) DEALING TEAM Kong Ming Ming (ext 3237) Shirley Chang (ext 3211) Norisam Bojo (ext 3233) Wong Wing Haur, Alvin (ext 3226) Institutional Dealing Team: Lim Teck Seng Sanusi Bin Mansor (ext 740) Fathul Rahman Buyong (ext 741) Ahmad Mansor (ext 744) Lum Meng Chan (ext 743) PJ Office: Mervyn Wong (ext 363) Mohd Hanif Wan Said (ext 111) Fong Jia Wen (ext 822) RESEARCH TEAM Lee Chung Cheng (ext 758) Lee Cherng Wee (ext 759) Jessica Low Jze Tieng (ext 756) Elliya Harisna binti Junaedi (ext 752) Norsyafina binti Mohamad Zubir (Ext 755) Teo Chee Chung (Ext 753) JF APEX SECURITIES - RESEARCH RECOMMENDATION FRAMEWORK STOCK RECOMMENDATIONS BUY : The stock s total returns* are expected to exceed 10% within the next 12 months. HOLD : The stock s total returns* are expected to be within +10% to 10% within the next 12 months. SELL : The stock s total returns* are expected to be below -10% within the next 12 months. TRADING BUY : The stock s total returns* are expected to exceed 10% within the next 3 months. TRADING SELL : The stock s total returns* are expected to be below -10% within the next 3 months. SECTOR RECOMMENDATIONS OVERWEIGHT : The industry as defined by the analyst is expected to exceed 10% within the next 12 months. MARKETWEIGHT : The industry as defined by the analyst is expected to be within +10% to 10% within the next 12 months. UNDERWEIGHT : The industry as defined by the analyst, is expected to be below -10% within the next 12 months. *capital gain + dividend yield JF APEX SECURITIES BERHAD DISCLAIMER Disclaimer: The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of JF Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report. Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of JF Apex Securities Berhad and are subject to change without notice. JF Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. JF Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against JF Apex Securities Berhad. JF Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of JF Apex Securities Berhad. Published & Printed By: JF Apex Securities Berhad (47680-X) (A Participating Organisation of Bursa Malaysia Securities Berhad) 5