IJMLD again beat expectations in its latest 2QFY14 results. New sales in 1HFY14  rose to MYR1.25bn, while 3Q will see a steeper jump  due to the successful launches of the Royal Mint Gardens and a few local projects. The share’s  recent  price correction has largely factored in the negative impact of the cooling measures.  We maintain our positive view on the stock given the company’s diversified product exposure. BUY

• Above  expectations.  On  an  annualised  basis,  IJMLD’s  2QFY14 earnings  beat  our  and  market  expectations.  The  strong  earnings  were due to the  higher  sales in the previous year,  better margins  and faster work progress.  The key  projects  that  contributed to the earnings include The  Light,  Bandar  Utama  Sandakan,  Shah  Alam  2,  Seremban  2  and Nusa Duta.  Its headline net profit was inflated by  a  MYR14m unrealised forex gain arising from GBP receivables from a subsidiary in UK.
• On  track  to  hit  MYR2.3bn  sales  for  FY14.  1HFY14’s  new  property sales amounted to  MYR1.25bn vs.  MYR500m  in 1QFY14,  mainly driven by  new  phases  at  Bandar  Rimbayu,  as  well  as  new  project  launches such as Seri Binjai in Seremban and Seri Riana Phase 2. 3QFY14 sales are expected to be boosted by the Royal Mint Gardens project in London (GDV  MYR1bn),  which  achieved  a  take-up  rate  of  >90%,  as  well  as EPIC @ Taman Tasek in Johor and Kalista in Seremban 2.  Amid recent measures to cool the property market, IJMLD held a preview of The Light Collection IV  this month  as  construction has  begun.  Working capital  for the project is undemanding given the cash flow from the earlier phases . To  our  surprise,  the  booking  rate  hit  40%,  at  an  ASP  of  MYR900  psf. Meanwhile,  the  Pantai  Sentral  Park  project  will  be  delayed  slightly  to early-2014 due to some procedural delays.
• Forecasts.  In  view  of  the  strong  results,  we  raise  our  FY14  earnings forecast  by  6%  but  lower  that  for  FY15  by  3%.  Unbilled  sales  in  1H surged to  MYR2bn vs.  MYR1.4bn  in  the previous quarter.  3QFY14 will see the handover of Pearl Regency and Collection II in Penang.
• Maintain Buy.  Our  FV  remains  at  MYR3.70, on par with RNAV/share. Given its diversified  product portfolio  and minimal exposure in Iskandar, we  believe  IJMLD  will  fare  better  than  its  peers  amid  the  current challenging  market  conditions.  The  recent  weakness  in  its  share  price provides a good opportunity to accumulate the stock.

Financial Exhibits

SWOT Analysis

Company Profile
IJM Land is a reputable developer in Malaysia  with landbank in Penang, Klang Valley, Seremban, Johor, Sabah and Sarawak. It is also one of the few players which have four anchor projects to sustain  its  long-term growth. These are: i) The Light;  ii) Pantai Sentral Park; iii) Bandar Rimbayu; iv) Sebana Cove, and other ongoing township projects that provide sustainable earnings.

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Source: RHB