We expect strong news flow from Penang over the next few months. IJMLD’s management is likely to finalise the JV partnership for its commercial cluster at The Light Ph. II soon. Pricing for the land is likely to surprise the market, and will further hold up the land values on the Penang island. Management also values the opportunities on the mainland, and may look to increase its exposure there going forward.

- Getting ready for The Light Phase II. We were hosted by Mr. Toh Chin Leong (GM of Northern region). The Light Phase II will be the next phase of growth for the Penang region. The interest from local and foreign players to participate in the development of the 37-acre commercial cluster (comprising three hotels, 1 retail mall, 1 convention centre and 1 performing arts centre) is very strong. The management is likely to select the “finalist” over the next two months as their 50% partner in this project. We believe pricing for the land in the JV partnership could potentially surprise the market, and land values on the island will be lifted further.

-  Sales at the Collection series picking up.  We visited the Light Point which was handed over in Dec12/Jan13. The design, facilities and landscaping are impressive and “thoughtful”. Take-up rate for Collection I, II and III is encouraging at 85%, 85% and 55%. Collection I and II will be handed over in July and Dec this year. Pricing for the Collection series has also seen a gradual step-up to about MYR1,100-1,200 psf (from MYR700-800 psf a year ago) for the units with seaview. Collection IV is slated for launch in 3Q. Collection IV and the 19 units of seafront designer bungalows are already under construction. Earnings impact is, therefore, rather immediate once this phase is put to the market.

-  Mainland – the untapped growth potential. Management also sees potential on the mainland given the anticipated spillover effect once the Penang Second Bridge is open. Currently, IJMLD only has one project – Permatang Sanctuary (140 acres left) on the mainland. We feel that the company is likely to widen its exposure on the mainland soon. 

- Fair value raised to MYR3.76.  Being the sector bellwhether, we raise our fair value on IJMLD to MYR3.76, by attaching a 10% premium to RNAV (from 0%). The company is well-positioned to ride on the buoyant sentiment on the property sector. It is the only listed developer with five anchor projects – The Light, Rimbayu, Pantai Sentral Park, Sebana Cove and Nasa land, besides the other ongoing township projects in Malaysia.

Source: RHB