-  We maintain our ACCEPT OFFER call for IJM Land at RM3.55/share following the release of its 1QFY15 results. Excluding exceptional items, IJM’s core net profit was RM77mil (-6% YoY, -48% QoQ).

-  The dip in earnings could be largely attributable to the completion of certain projects in the last quarter (e.g. Light Collection II, Maritime Piazza & Suites, SuriaMas Suites JB).

-  Among the one-off items recorded in 4QFY14 include a RM223mil gain on re-measurement on its purchase of an additional 10% stake in the Bandar Rimbayu development.

-  At the core level, the 1QFY15 bottomline made up 23% of our full-year forecast and 20% of consensus. We nevertheless retain our FY15F net profit forecast of RM340mil on account of an expected pick-up in progress billings from its new projects (e.g. Bandar Rimbayu).

-  IJM Land’s unbilled sales remains at a healthy RM2bil, and backed by a strong pipeline line of launches worth c.RM3bil for FY15F.

-  From our channel checks, the initial response to Inwood Residences (211 condo units) at Pantai Sentral Park has been encouraging. We expect the indicative pricing for the first batch of units to be c.RM700psf.

-  Similarly, all 40% of the first block of landed homes under Phase 3 of Bandar Rimbayu (Periwrinkle) has been snapped up with starting prices at RM875k. The remaining units are set to be released by year-end.

-  The group also recently gained a foothold in the Malaysia-China Kuantan Industrial Park (MCKIP) after acquiring a 40% stake in Kuantan Pahang Holding (KPH) from SP Setia for c.RM50mil (including ~RM10mil as reimbursement for company advances). KPH has a 51% stake in MCKIP.

-  We retain our view that investors of IJM Land should accept the take-over offer by its parent, IJM Corp. The offer price of RM3.55/share, despite being at a 9% discount to our previous fair value, allows IJM Land’s shareholders to encash their value upfront.

-  Furthermore, IJM Land shareholders who opt to migrate to IJM Corp can still enjoy exposure to IJM Land’s deepening prospects under an enlarged entity at a relatively attractive price point (RM6.70/IJM Corp share vs. our existing fair value of RM8.00/share with further NAV upside if the deal goes through).

Source: AmeSecurities