- Maintain BUY on IJM Land with an unchanged fair value of RM3.84/share, pegged at a 10% discount to its FD NAV. IJM Land reported a strong set of 1QFY13 results. Core net profit surged by nearly 60% YoY on stronger property earning and unrealised forex gains of RM5mil (to a lesser extent) due to strengthening British pound from advances for its upcoming debut project in London.

- Property development revenue rose by 85% YoY (QoQ: 23%) on the back of stronger progress billings from ongoing projects. The key contributors include The Light in Penang, and developments in Bandar Utama (Sandakan), Shah Alam 2, Seremban 2 and Nusa Duta, Johor.

- However rental income from investment properties fell by 77% YoY to RM5mil. This was largely due to lower rental income going forward following the disposal of Menara IJM Land in May 2012. The latter also resulted in a net gain on disposal of RM21mil that was booked in 1QFY13.

- IJM Land had reportedly chalked up new property sales of over RM500mil in 1QFY14. For the first four months of FY14F, IJM Land has launched roughly RM1bil out of the RM3bil target for FY14F. Pre-sales momentum should accelerate in the coming months.

- The breakdown of these new launches is as follow: (i) Klang Valley & Seremban (RM1.2bil); (ii) Penang (RM300mil); (iii) Seremban (RM300mil); (iv) Southern region (RM300mil); and (v) East Malaysia (RM150mil).

- Just two weeks ago, IJM Land proposed to acquire an additional 10% stake in the Bandar Rimbayu development. This move paves the way for IJM Land to consolidate the deep potential of Bandar Rimbayu in the early stages of its life cycle.

- Response to Bandar Rimbayu has been strong thus far. Phase 1 (Chimes: 526units), which was launched in early March, saw almost all of the non-bumi units taken-up. Similarly, Phase 2 (Perennia: 488 units) – launched about a month ago – has been fully-sold (ex-Bumi units).

- Not unlike the Setia Alam township, we believe Bandar Rimbayu is capable of delivering annual sales of ~RM1bil (target: three launches/year) within its first year. Compared to Chimes, we estimate that the average pricing for Perennia is about ~5%-7% higher.

- IJM maiden launch of its Royal Mint Garden project in London (GDV: ~RM1bil) is set to take place in September. We view the recent share price correction as an opportunity to accumulate the stock. At current prices, IJM Land is trading at a deep discount of 41% viz-a-viz its NAV.

Source: AmeSecurities