- Maintain BUY on IJM Land with our fair value raised slightly to RM3.86/share following its stronger-than expected 2QFY14 results. We also factor in a lower net cash balance of RM44mil due to higher cash outlay required for some of its new landbank.

- Excluding a RM21mil gain from the disposal of Menara IJM Land in 1QFY13, core earnings surged by a strong 112% YoY in 1HFY14 – outperforming both consensus and our earlier estimates. Hence, we raise FY14F earnings by 10% (FY15F: 2%) to account for the stronger-than-expected 1H.

- Property revenue rose by 73% YoY on stronger sales and work progress for ongoing projects. Key contributors include The Lights, Bandar Utama (Sandakan), Shah Alam 2, Seremban 2 and Nusa Duta in JB.

- New sales came in at RM1.2bil for 1HFY14F - on track to surpass last year’s achievement of ~RM2bil (our forecast: RM2.3bil). Unbilled sales stood at slightly over RM2bil.

- Significantly, robust pipeline has yet to take into account c.RM900mil worth of locked-in sales achieved from the launch of Tower Bridge Phase 1 (GDV: ~£200mil). The project marks IJM Land’s maiden foray into a resurgent London property market. Since its launch in end-September, the overall take-up rate has surpassed 90%.

- We do not see a let-up in IJM Land’s pre-sales momentum. Leveraging on the success of Phase 1, IJM Land is set to unleash Phase 2 of The Lights that mainly comprises commercial components.

- Having completed reclamation works, IJM Land plans to kick off the project (GDV: over RM2bil) by early-2014. Given the strong response by investors, management is looking to unlock value by bundling the first four parcels into an SPV (including a retail mall).

- This would enable IJM Land to monetise value via land sales to the SPV, and subsequently, development profits when the project takes off.

- IJM Land notes that buying sentiment could be a tad cautious in the near-term in lieu of the recent cooling measures introduced by the government.

- With a proven track record in township development, it believes that its affordable range of products in strategic.

Source: AmeSecurities