Journey to Wealth
IJM Land - Stronger than expected sales
Period 3Q13 /9M13
Actual vs. Expectations 9M13 net profit of RM150m is broadly within expectations, accounting for 68% of consensus estimates and 65% of ours. 2H (particularly 4Q) is typically stronger in billings.
9M13 chalked up RM1.4b sales (+59% YoY), which is quite close to ours and the company's full FY12E target of RM1.5b. 3Q13 chalked up c. RM0.5b sales (0% QoQ, +85% YoY), whose drivers were Johor (Nusa Duta), Light Collection III, Seri Riana and S2 Centrio, Wangsa Maju.
Dividends None, as expected.
Key Results Highlights YoY, 9M13 net earnings was up 9% YoY largely due to the gains on disposal (gross: RM20m) of Menara IJM and improvement in EBIT margins by 2.1ppt to 22.7%. Without the gains, core earnings eroded slightly by 6% to RM129m since associate losses widen to RM10m from RM5m in 9M12, interest income fell by 27% and start-up losses arising from development of Royal Mint Street@London.
QoQ, 3Q13 topline grew 34% to RM358m because of stronger property billings and sales, which were more than sufficient to cover the increased associate losses (+239% QoQ to RM5m). Hence, net profit rose 19% to RM54m.
Outlook Management appears confident with a higher FY13E sales target of RM1.7b given its new launch of Sanctuary Garden@Bkt Mertajam (estimated GDV of RM100-150m) and the widely anticipated launch of Rimbayu. We understand that Rimbayu Phase 1 (GDV: RM300m) is fully booked and should be converted to SPA sales by end-FY13. Apart from UOA Development (OP; TP: RM2.30), IJMLAND is the only other developer to beat their own and our sales targets.
Change to Forecasts Raise FY13E sales assumptions by 13% to RM1.7b.
Impact will only be felt from FY14 onwards. Hence we raise FY14E earnings by 4% but maintain FY13E net profit. Unbilled sales of RM1.4b provides >1 year visibility.
Rating Maintain OUTPERFORM
Developer with the most 'affordable' product offerings. More landbanking and overseas ventures will excite investors, particularly given IJMLAND's net cash position for the last 7 consecutive quarters.
Valuation Maintain TP to RM2.60 based on 15%* discount to FD SoP RNAV of RM3.07.
Risks Unable to meet sales targets. Delays in launches.
Sector risks, including severe negative policies.
Source: Kenanga
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
