We raise our FV for  TILB to MYR2.08.  TILB is acquiring another 21-acre land  in  Pearl  City,  which  will  bring an  additional  GDV  of  MYR120m  to the township.  Land cost of MYR14 psf will ensure the sustainability of its high profit margin. Given its product offerings, the impact of the new measures on TILB is minimal. We maintain our positive stance on the stock in view of the promising prospects of Penang mainland. BUY.

• Another 21-acre land at Pearl City.  Tambun Indah (TILB) is acquiring another  21-acre  freehold  land  at  Pearl  City.  This  came  after  the acquisition  of  a  24.1-acre  land  parcel  also  in  the  township  last  month.The  purchase consideration  of MYR12.7m  translates into a land cost of MYR14 psf, similar to the previous transaction.
• Sustaining high profit margin. The key reason for the lower acquisition price compared with Ecoworld’s over MYR30 psf and IJMLD (IJMLD MK, BUY, FV: MYR3.70)’s MYR18.50 psf is that the land does not have road access  other  than  via  TILB’s  land.  The  low  land  cost  will  ensure  the sustainability of TILB’s  attractive margin of 30-35%. With this  new land, the  total  GDV  of  Pearl  City  will  increase  by  MYR120m  to  about MYR2.4bn.  We  are  positive  on  management’s  efforts  to  continue widening  TILB’s  presence  on  the  Penang  mainland.  The  big  players such  as  Ecoworld,  IJMLD  and  Mah  Sing  (MSGB  MK,  NEUTRAL,  FV: MYR2.44)  have been aggressively snapping up  landbank on Seberang Perai  Selatan  this  year,  given  the  positive  prospects  brought  by  the opening  of  the  Penang  Second  Bridge  in  1Q14,  as  well  as  local  and foreign investments flowing to Batu Kawan.
• Minimal  impact  from  state’s  measures.  TILB  sees  minimal  impact from  the  state’s  new  cooling  measures,  as  demand  for  properties  in Pearl  City  is  genuinely  driven,  and  all  of  TILB’s  products  are  priced above  the  MYR250k mark.  To note, the state government will impose a 2% levy on  properties sold within three years  effective from 1 Feb 2014, and  limit  the  sale  of  affordable  houses  (<MYR400k  on  the  island  and <MYR250k on the mainland) only to eligible first-time home buyers in the state housing’s list of registered buyers within the first five years.
• Valuations.  We make no changes to our forecasts, as the new land is planned  for  the  later  phases  in  the  township.  Given  the  incremental value,  we  raise  our  FV  to  MYR2.08  (from  MYR2.05),  based  on  an unchanged 15% discount to RNAV. Maintain BUY.

Financial Exhibits

SWOT Analysis

Company Profile
Tambun  Indah  Land  Bhd  (TILB)  is  a  developer  based  in  Penang  m ainland.  Its  flagship  township  Pearl  City  is  located  at  Simpang Empat, 15-minute away from the PSB.

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Source: RHB