• Anticipate strong earnings and dividend payout in FY16-18. According to Bloomberg, IBHD’s earnings is envisaged to grow 35% CAGR from 2015-2018, underpinned by positive growth from both the Property Development and Leisure segments coupled with RM718m unbilled sales as at 2Q16 (RM580m in 2Q15). The strong unbilled sales was contributed by the encouraging sales of the Group’s on-going projects and the recent launch of the Hyde Tower and 8Kia Peng.

• Meanwhile, the Group plans to launch the “Central Towers” proj ect (by end 2016), a development with approximate GDV of RM1.1bn which comprises an office tower, two residential towers, the Double Tree by Hilton hotel, a convention centre and a performing arts centre.

• Overall, contribution from the Property Development division is expected to perform better in 2H16 as i-SOHO project will be completed and handed over to the purchasers. At the same time with the expected completion of the car park podium, the construction progress of the remaining developments (i-Suites, Parisien, Liberty and Hyde towers) can progress at a faster rate.

• At RM0.545, IBHS is trading at 6.3x FY17 P/E (37% below 3-year average 10x) and 0.65x P/B (23% below 10-year P/B of 0.84x), backed by rising DY from 2.8% in FY15 to projected 5.9% in FY18.

• Rounding bottoms signal further upside ahead. Rounding Bottom is a long-term reversal pattern, representing a long consolidation period that turns from a bearish bias to a bullish bias.

• Following the “double” roundi ng bottom formations and closing above all the key 10-d/20-d/30-d/50-d/100-d/200-d SMAs, we are confident that IBHD’s share prices will appreciate further in the near term. MACD is on the verge of confirming its golden cross formation while RSI and slow stochastic indicators are hooking up strongly.

• Key upside target is RM0.57 (21 July high). A decisive breakout above RM0.57 will spur prices higher to RM0.60 (61.8% FR) and our LT objective at RM0.64 (76.4% FR). Meanwhile, key supports are RM0.525 (30-d SMA) and RM0.515 (50-d SMA). Cut loss at RM0.505.

Source: Hong Leong Investment Bank Research - 16 Aug 2016