Period     4Q13 / FY13

Actual vs. Expectations    FY13 net profit of RM215m was within expectations, making up 99% of street and 97% our estimates. However, full year sales of RM2.0b (+28% YoY) exceeded our assumed RM1.7b largely due to overwhelming response of Rimbayu Phase 1 (GDV: RM300m), Johor projects worth c. RM300m (Nusa Duta, D’Ambience), Seri Riana, The Light Collection III and on-going townships. 

Dividends    Declared NDPS of 5.0sen (1.5% yield) for FY13, which exceeded our estimates by 25%. 

Key Results Highlights   YoY, EBIT was up by 13% to RM287m although revenue was only slightly up by 4% as there were more billings of higher margin property projects, which allowed the 1.9ppt increase in EBIT margins to 22.9%. FY13 net profit was up by 11% largely due to the gain on disposal of Menara IJM of RM20m.   

QoQ, net profit rose by 22% to RM65m as it was largely buoyed by higher net interest income (+69% YoY) and narrower associates/JCE losses.

Outlook    The group is targeting to launch up to GDV RM3.0b worth of new and on-going projects, including new phases of Rimbayu, Seri Riana 2b, Pantai Central Park, Seri Binjai@Seremban, Condominium project in JB City Center. 

Change to Forecasts  Increased FY14E net profit by 5% to RM284m (+32% YoY). We raised FY14E sales assumptions by 16% to RM2.2b (10% YoY) as we assume 70%-75% take-up on their RM3.0b GDV worth of launches this year, but main impact of higher sales will be felt from FY15E onwards. Unbilled sales of RM1.8b provide 1.5 years visibility. 

Rating  Maintain OUTPERFORM

Valuation     Raised TP to RM3.50 which will be on parity to its revised FD RNAV of RM3.50 (previous TP of RM2.93 was based on 5% discount to FD RNAV of RM3.07). The higher FD RNAV reflects the latest balance sheet and GDV figures. IJMLAND has c. RM5.2b GDV worth of Johor projects relative to their FY14E sales of RM2.2b and ‘affordable’ housing plays like Rimbayu, Seremban 2 and Shah Alam 2. We view these segments as strong demand drivers which will help the group secure, if not, exceed sales targets. 

Risks    Unable to meet sales targets. Delays in launches.

Sector risks, including severe negative policies.

Source: Kenanga