- We reaffirm our BUY recommendation on IJM Land with our fair value unchanged at RM3.80/share, assigning a 10% discount to our fully-diluted NAV estimate of RM4.20/share.
- IJM Land reported a net profit of RM51mil for 1QFY13, which is largely in-line with our and street's estimates ' accounting for 21% and 23%, respectively. As expected, no dividend was declared for the quarter.
- Key ongoing projects which contributed to the revenue achieved during the quarter under review included:- (1) The Light development (2) Bandar Utama, Sandakan (3) Shah Alam 2 (4) Seremban 2 (5) Nusa Duta, Johor Bahru.
- However, stripping off the gain on disposal of RM21.1mil from the sale of Menara IJM Land in Penang, core earnings came in at RM30mil ' falling way short of our full-year estimate of RM238mil.
- Having said that, there were completions of high-margin products including commercial properties and bungalow units in the preceding quarter and there were meaningless progress billings from new projects during the current quarter.
- We are keeping our estimates at this juncture as earnings would be supported by strong unbilled sales of RM1.2bil and robust pre-sales of RM2.5bil in the pipeline ' to be underpinned by its three key projects Bandar Rimbayu, The Light and London development.
- Bandar Rimbayu would be launched in 4Q2012 and would see some 526 units on offer, to be developed on a 56.3acre-piece of land. This development will give IJM Land a strong foothold in the lucrative township development in the Klang Valley. We estimate that the annual pre-sales at the township may reach RM1bil at the peak.
- IJM Land remains undervalued by the market, currently trading at a steep discount of 43% to our estimated fully-diluted NAV of RM4.20/share. We expect this discount to narrow soon with the pick-up in sales numbers, to be anchored by Bandar Rimbayu.