IJMLD will undertake a JV development in Kuantan, which  forms part of the  Kuantan  Port  expansion  project  by  IJM  Corp.  The  JV  project  is  a mixed  development  worth  MYR1.5bn.  The  positive  prospects  of  the port’s expansion will spur demand for industrial land plots in the future. Given the  long-term  nature of this  project, we keep  our RNAV estimate unchanged. We maintain our MYR3.70 FV and BUY rating on the stock.

• Making its way to Kuantan.  IJM Land (IJMLD) entered into a 60:40 JV with Sino Development Ventures (SDV) to jointly develop 675.1 acres of leasehold  land  in  Kuantan.  Based  on  the  purchase  consideration  of MYR296.1m  for the land, this  translates into a land cost of MYR10 psf, which we deem reasonable.
• Part of Kuantan Port expansion project.  This is a follow-through deal after  IJM  Corp’s  (IJM  MK,  Neutral,  FV:  MYR6.21)  tie-up  with  Guangxi Beibu  Gulf  International  (Guangxi)  for  the  expansion  of  Kuantan  Port.
• Under the partnership agreement, a JV needs to be formed to acquire the land to be developed as part of Kuantan Port’s hinterland. The 40% stake held by SDV will be acquired by Guangxi in the future.
• A mixed development.  A  mixed development project worth  MYR1.4bn GDV  is  being  planned.  It  comprises  residential,  commercial  and industrial components,  each making up 11%, 36% and 53% of the land.
• Infrastructure  will be put in before the industrial land plots are sold. The site is located along the Gebeng Bypass and is about 5km from Kuantan Port and 25km from Kuantan town. It will be an extension of the current Gebeng  Prime  Industrial  Estate  which  currently  houses  a  world-class chemical  and  petrochemical  industrial  zone  as  well  as  many small/medium-scale  industries.  Given  the  growth  prospects  upon  the completion of the port expansion, the industrial land plots are expected to be in demand in a few years’ time.
• Forecasts.  We  make  no  changes  to  our  earnings  forecasts  as  the project is not expected to take off soon, and the development period will be long, i.e. tentatively 10 years.
• Maintain BUY.  The development in Kuantan has a  neutral  effect on  our RNAV for now, as it is a  fairly long-term project. Thus, we  keep our FV unchanged at MYR3.70, on par with RNAV/share. Maintain BUY.

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 a lso one of the few players which  have four  anchor projects to sustain long-term growth: i) The Light, ii) Pantai Sentral Park, iii) Bandar Rimbayu, iv) Sebana Cove, on top of a few other ongoing township projects that provide sustainable earnings

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Source: RHB