-  Maintain BUY on IJM Land with a higher fair value of RM3.84/share (previous: RM3.80/share) on an unchanged 10% discount to its FD NAV. This is to factor in a higher stake in the Bandar Rimbayu project (from 50% to 60%).

-  IJM Land has proposed to acquire an additional 10% stake in Radiant Pillar from Kumpulan Europlus (K Euro) for RM52mil. The deal is set to be completed by 4Q13.

-  Radiant Pillar - a JV between IJM and K Euro – is the developer of Bandar Rimbayu, an integrated township located next to the matured Kota Kemuning neighbourhood, with immediate development potential (GDV: RM12bil over ten to 12 years).

-  We are positive with this move as it allows IJM Land to consolidate the future earnings potential of Bandar Rimbayu at an early stage of its development cycle.

-  For a start, the original land cost for Bandar Rimbayu is only RM5psf compared with an average of ~RM18psf (based on NPV) that Tropicana Corp paid for another 1,172 acres of land near Bandar Rimbayu (total cost: ~RM1.3bil).

-  Secondly, Bandar Rimbayu is located within the matured but rapidly developing South Klang/Shah Alam corridor. Given its lifestyle/green-themed offerings and high content of landed components, the debut of Bandar RImbayu is timely ahead of an expected upsurge in property demand post-election, notably within the upgrader’s segment.

-  Thirdly, the expected completion of the new link connecting the SKVE to Pulau Indah in September would further enhance the excellent connectivity that Bandar Rimbayu enjoys, with linkages to five major highways.

-  Not surprisingly, the maiden launches of Bandar Rimbayu have been highly encouraging. Phase 1 (Chimes: 526 units) was successfully launched in early March. To-date, almost all of the non-bumi units have been taken-up. The recently launched Phase 2 (Perennia: 488 units) has been equally encouraging.

-  Offering bigger built-ups, the colonial-themed Perennia is priced from RM660k (22’x80’) and RM720k (24’x80’) respectively. Compared to Chimes, we estimate that the average pricing for Perennia is about ~5%-7% higher.

-  Bandar RImbayu forms part of an exciting trio of new launches for IJM Land this year; the other two being Pantai Sentral Park and Royal Mint Street, London. Not unlike the matured Setia Alam township, we believe Bandar Rimbayu is capable of delivering annual sales of ~RM1bil (target: three launches/year) within its first year

Source: AmeSecurities