We  maintain  our  Buy  call  on  IJMLD,  but  with  a  higher  MYR3.55  FV. IJMLD  has  raised  its  stake  in  the  Pantai  Sentral  Park  project  to  70%, from  40%,  with  a  proportionately  higher  capital  outlay.  Meanwhile,  the company  has  also  increased  its  exposure  to  the  Penang  mainland  by buying 70 acres of land in Jawi at MYR18.50 per sq ft, as big developers show growing confidence in the area.

- Raising stake in Pantai Sentral Park to 70%. Following the signing of a JV deal with Amona Development in Sept 2012, IJMLD  has raised its stake in the 58-acre Pantai Sentral Park project to 70% from 40%. As the terms  of  the  agreement  are  the  same,  IJMLD  only  needs  to  fork  out  a proportionately higher capital outlay. Under the deal, the company has to pay  Datuk  Bandar  KL  (DBKL)  a  total  of  MYR331m  within  six  months upon fulfilling the stipulated conditions. The amount includes land cost, a minimum guaranteed profit and the cost of building an access road to the New  Pantai  Expressway  (NPE),  which  has  been  pre-approved.  DBKL will  be  entitled  to  a  20%  share  of  the  excess  profit.  The  project, estimated  to  have  a  GDV  of  MYR4bn-MYR5bn,  is  slated  for  launch  in 4Q13. This highly anticipated project comprises high- and low-rise condo units, surrounded by 200 acres of green lung. 

- Things  get  exciting  on  Penang  mainland.  Recognising  the  huge growth potential on Penang mainland, IJMLD recently entered into a deal to  acquire  70  acres  of  land  in  Jawi  at  a  purchase  consideration  of MYR56m. The site, located next to the Jawi toll, is just 20-25 minutes to the Penang Second Bridge. IJMLD plans to develop the land into a small township. As the concept and development plans are still preliminary, we estimate  that  the  land  will  add  MYR300m-MYR350m  in  GDV  to  the company’s portfolio.  From  our  checks  with  developers,  we  found  that new  launches  on  the  mainland  have  been  well-received  as  job opportunities are teeming as more industrial players set up their plants in Batu  Kawan  and  Seberang  Perai  Selatan.  As  house  prices  on  the mainland are more affordable, more young people are gradually moving from the island as properties on the island get more expensive.  

- Maintain  Buy  and  forecasts;  FV  raised  to MYR3.55.  All  in,  we  revise our  fair  value  to  MYR3.55  (from  MYR3.42)  to  put  it  on  par  with  the stock’s RNAV.  Maintain  BUY.  IJMLD remains our  top  sector  pick,  apart from Sunway (SWB; Buy, FV: MYR3.76) and Tambun Indah Land (TILB; Buy, FV: MYR1.71). 

Source: RHB