• We initiate our coverage on Titijaya Land Bhd (Titijaya) with a BUY recommendation and a fair value of RM2.01, based on a 30% discount to its RNAV.

• Titijaya was founded in 1997 by Tan Sri Lim Soon Peng. Its early projects included double-storey terrace houses and three-storey shop offices in Taman Bukit Cheras, Kuala Lumpur and double-storey terrace houses, residential lots and low-cost apartments in Klang.

• Titijaya launched its first high-rise development project, E-Tiara Serviced Apartments in Subang Jaya, in 2004. Subsequently in 2007, Titijaya embarked on its first mixed commercial development of office suites and retail lots, First Subang, in SS15 Subang Jaya. This was followed by Subang Parkhomes (Phase 1), its first low-rise and lowdensity condominiums located in Subang Jaya in 2009. In 2013, Titijaya was listed on the Main Market of Bursa Malaysia.

• Currently, its ongoing projects include H2O @ Ara Damansara (mixed development), Emery @ Kemensah (high-end landed residential) in Ampang, Mutiara Residences in Klang (landed residential) and Seri Alam Residence in Klang (landed residential).

• Titijaya is launching new developments with RM1.82bil GDV in FY18. These comprise 5 new projects, namely The Shore @ Kota Kinabalu (mixed development), 3rdNvenue @ Jalan Ampang (mixed development), Riveria KL Sentral (mixed development), Damansara West, Bukit Subang (township), and Park Residensi @ Cheras (landed residential).

• Titijaya’s revenue growth has been strong, with a FY13- FY16 3-year CAGR of 29.0%. Although we expect revenue growth to be negative in FY17 consistent with the challenging industry condition, we expect a rebound from FY18 onwards, supported by a slew of new launches in FY18 and beyond.

• Its earnings growth has also been commendable, with its FY13-FY16 3-year net profit CAGR standing at 7.1%, despite its net profit margin dropping to 17.1% in FY16 compared to 23.8% in FY15, which we believe was due to the challenging industry environment. Moving forward, we expect Titijaya’s earnings to return to positive growth from FY18 onwards, supported by the upcoming launches of new projects and improving market conditions, which should result in its profitability level to normalise to its historical level.

Source: AmInvest Research - 14 Aug 2017