We attended IJMLAND’s Royal Mint Gardens project briefing and came away feeling positive on the prospect of its first maiden London property project. The project will be launched on 27-Sep. ASP is GBP1100-1300psf which is considered fair. Booking interest is c. 40% to date and we are positive that the project will be well received. The group has also entered into a 50:50 JV with FCW Holdings Bhd (FCW) to develop a mixed development on over 15.4ac land along Jln Segambut with an expected GDV of RM1.5b where the land cost is considered fair. Going forward, IJMLAND will be kicking off their Pantai Sentral Park project in 4Q14 and it is also expediting the launch of Rimbayu Phase 3 due to overwhelming interests. No changes to estimates (refer overleaf). We reiterate our OUTPERFORM recommendation with a higher TP of RM3.60 (from RM3.57), which is on parity to its FD RNAV, due to inclusion of the Jln Segambut project.

Maiden London project, the Royal Mint Gardens, will be launched on 27-Sep. To recap, the project is a 51:49 JV between IJMLAND and Lite Bell Consl. S/B to develop a 2.7ac site on Royal Mint Street London, UK (E1 London). Key selling points of the project: (i) overlook the River Thames,(ii) situated above the National Rail and DLR railway lines, and (iii) a stroll away from The Square Mile or London’s financial district. The project has a GDV of GBP200m (RM1.0b) and will feature 3 blocks of 254 units of apartments (387-1431sf) on top of a retail platform. ASP of GBP1100-1300psf is fair vis-à-vis the going rate in the area, while we understand that Battersea (the other side of the River Thames) has reached a record price of RM1500psf. So price per unit will start from GBP465k/unit (RM2.4m/unit). Bookings are now at c. 40% of the project which is largely Malaysians as the group has arranged for Ringgit-financing facilities. They also expect to see strong interests from other overseas buyers, particularly from the Middle East.

368 Residences @ Jln Segambut. The group has entered in to a 50:50 JV with FCW Holdings Bhd (FCW), whose major shareholder is Tan Sri Robert Tan, to develop a mixed development over 15.4ac land along Jln Segambut over a 3-5 year period. The land is strategically located next to the Segambut KTM station (via an existing bridge) and is accessible via DUKE highway. Expected GDV is RM1.5b based on an ASP of RM550-600psf which is the going rate in the area. The JV Co will pay RM188.0m (RM280psf) for the land. We deem the land cost as fair given that comparables in the area for residential and commercial land is between RM155-350psf while land cost only makes up 12% of GDV, implying that PBT margins are at 20%-25%. IJMLAND’s investment portion of RM94m can easily be internally financed given its net cash position which will remain so post acquisition. We view this development positively as the group is tapping onto more ‘rail-plus-property’ driven location projects.

Maintain OUTPERFORM with higher TP of RM3.60 (RM3.57 previously) on parity to its FD RNAV. The increase in our FD RNAV and hence TP, is due to the inclusion of Jln Segambut JV project. IJMLAND has c. RM5.2b GDV worth of Johor projects relative to their FY14E sales of RM2.2b and ‘affordable’ housing schemes such as 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. As a net cash entity with relatively lower sales base effect vs. other sizeable developers, we believe IJMLAND is best equipped to weather any uncertainties and achieve healthy earnings growth.

Source: Kenanga