We came away from Tambun Indah (TILB)’s briefing last week  feeling positive. Management has planned pipeline launches worth MYR2bn for FY14.  The  business  park  at  Pearl  City  is  also  taking  shape  as  TILB  is close to inking a deal to set up an international school. We believe news flow  on  Batu  Kawan  and  landbanking  by  other  developers  will  be  the stock’s catalysts. We maintain our BUY rating and FV of MYR1.82. 

- MYR2bn  projects  in  FY14.  TILB  plans  to  release  MYR129m  worth  of projects  in  4Q13,  in  addition  to  MYR300m  worth  of  unsold  stock launched  in  the  earlier  quarters.  The  new  projects  are  mainly  outside Pearl  City  –  Taman  Bukit  Residence,  Camellia  Park  and  Permai Residence.  We  look  forward  to  FY14  as  the  new  projects  are  largely concentrated in Pearl City, and will be launched on time for the opening of  the  Penang  Second  Bridge  (PSB)  in  1Q14.  The  few  new  phases, which  are  worth  MYR2bn,  are  Pearl  Avenue  (shop  offices),  Pearl Harmoni and Tropika (terraces) and Rain Tree Park 1 (gated homes) in Pearl  City. We  expect  the  average  take-up  rate  to  improve  further  from the  current  73.3%  as  the  industrial  activities  as  well  as  some  state-initiated  developments  in  Batu  Kawan  continue  to  drive  demand  for properties on the mainland.

- Amenities  in  business  park  taking  shape.  Pearl  City’s  107-acre business  park  is  making  good  progress.  While  construction  on  the shopping mall will start over the next few months, management is close to  inking  a  deal  with  an  international  school  operator,  after  which  it  will move on to the next component – a medical centre/hospital. 

-  Eyeing more landbank to sustain growth. Not content with just  Pearl City,  TILB  plans  to  scout  for  other  strategic  landbank  and  replicate  the success  of  Pearl  City.  Although  there  are  no concrete  deals  as  yet,  the key  target  areas  are  other  parts  of  Penang  mainland  and  Rawang  and Seremban in the Klang Valley.

- Maintain Buy. We remain positive on the stock as the major catalyst i.e. the  PSB  has  yet  to  be  opened  officially.  Meanwhile,  news  flow  on  Batu Kawan  and  landbanking  by  other  developers  will  be  TILB’s re-rating catalysts.  We  maintain  our  Buy  rating,  with  an  unchanged  FV  of MYR1.82, at a 15% discount to RNAV.

Source: RHB