-  We maintain our BUY call on Titijaya Land with a slightly lower fair value of RM3.25/share (vs. RM3.30/share previously) on an unchanged 25% discount to its revised NAV/share, as we roll-over our valuation base to FY15F.

-  Titijaya released its FY14 ended June results yesterday, with net profit hitting a record RM71mil. This was broadly in line with our estimates (+4%).

-  For the 4QFY14 reporting period, net profit rose 9% QoQ on higher progress billings. The Seri Alam Industrial Park project was among the key contributors during the quarter. The group’s pre-tax margins however normalised to 31% in 4QFY14 from 40% in 3QFY14 (FY14: 34%).

-  FY14 sales surged c.77% YoY to RM450mil, partly underpinned by the good response received from its new projects such as Embun@Kemensah and H2O Ara Damansara.

-  Titijaya declared a final single-tier DPS of 4 sen or a yield of 2%. This translated into a payout ratio of c.20%, which is within our estimates. We also introduce our FY17F net profit forecast of RM129mil (+14% YoY).

-  More importantly, we remain bullish on Titijaya’s prospects moving into FY15F were we project its new sales to rise further to RM600mil (+33% YoY).

-  The conversion of bookings received from the first two blocks of H2O will be crystallised during the current financial year.

-  This is further backed by robust pipeline of launches that will likely include new launches/phases for Embun@Kemensah, H2O as well as Trio service apartments in Shah Alam.

-  Equally, Titijaya's share will be supported by an increasingly robust landbanking momentum. Most recently, the group announced that it is looking to enter into a JV to co-develop a mixed-development project in Jln. Eaton, KLCC (GDV: ~RM2.5bil).

-  Such a move would represent Titijaya’s first foray into the high-end KLCC residential market and lift our fair value by a further RM0.32/share or c.10% to RM3.57/share.

-  Titijaya is trading at a steep discount of 41% vis-a-vis its NAV. We believe this is unjustified, given its increasingly prolific track record in sourcing for prime landbank. This is supported by a strong pre-sales pipeline, strong balance sheet (FY15F net gearing: 25%) and robust FY15F-17F EPS CAGR of 22%. 

Source: AmeSecurities