- We re-iterate our BUY recommendation on Titijaya Land with an unchanged fair value of RM2.72/shareshare. We arrive at our fair value after ascribing an unchanged 25% discount to its NAV/share of RM4.54/share.

- Titijaya reported a 1QFY16 net profit of RM20mil or 28% of our full-year forecast of RM75mil. Earnings fell 10% YoY as a result of lower recognition from the Seri Alam Phase I & II project in Klang. However, it improved 13% QoQ as progress on certain ongoing projects (e.g. Zone Innovation Park) picked up during the quarter.

- New property sales achieved was RM80mil against the full-year target of RM400mil. (FY14: ~RM500mil). This is backed by healthy unbilled sales of close to RM700mil or double its FY15 property development revenue.

- For the current financial year, Titijaya has in its pipeline three projects that will be progressively launched. They are (i) Phase 2 of the H2O high rise residences in Ara Damansara; (ii) Emporia office suites in Shah Alam; and (iii) a landed project in Cheras.

- The group is also in the process of securing anchor tenants for its upcoming mall at the Emporia integrated development, as well as for the retail lots at 3elements in Seri Kembangan.

- Just last month, Titijaya announced that it had entered into a JV with Amona Development Sdn Bhd to develop a parcel of prime land in Bukit Bintang under a 40:60 JV structure.

- We understand that the deal involves a privatisation agreement that entails the construction of school facilities in exchange for the said land measuring approximately 2.7 acres. We have however, yet to include any contributions from the Bukit Bintang land pending the finalisation of detailed terms.

- More importantly, this latest development further solidifies Titijaya’s strategic positioning in sourcing for prime development land within the KL City Centre following earlier landbanking moves near KL Sentral (Riveria Sentral@KL) and Jln. Eaton (opposite Suria Stonor).

- Titijaya’s balance sheet remains strong. It is sitting on a net cash pile of RM22mil as at 30 September. The stock is currently trading at a steep 61% discount vis-a-vis its NAV of RM4.54/share.

Source: AmeSecurities Research - 27 Nov 2015