IJMLD’s  3QFY14 results beat  expectations again.  New sales in 9MFY14 amounted  to  MYR2.5bn,  including  MYR750m  in  sales  from  the  Royal Mint  Gardens  project  in  London.  Its  earnings  outlook  remains promising, with MYR2bn unbilled sales. Maintain BUY call and MYR3.70 FV on IJMLD.  We believe the sector’s valuations have largely priced in the negatives, and sentiment should gradually recover from 2Q/3Q.

• Above  expectations.  On  an  annualised  basis,  IJMLD’s  3QFY14 earnings  were  ahead  of  our  and  market  expectations.  The  strong earnings  were  due  to  the  higher  sales  in  the  previous  year  and  faster work progress.  The handover of Pearl Regency in Penang  in Oct 2013 also  boosted  the  earnings  during  the  quarter.  The  key  projects  that contributed to the earnings included The Light, Nusa Duta, Shah Alam 2, and  Seremban  2.  Note  that  the  group  recognised  MYR5.6m  in unrealised forex gains during the quarter.
• MYR2.5bn  sales  in  9MFY14.  9MFY14  new  property  sales  totaled MYR1.75bn  (up  from  MYF1.25bn  in  1HFY14).  Total  sales  would  have come in at  MYR2.5bn if sales  from  Royal Mint Gardens  (RMG)  London were  included.  We  expect  full-year  sales  to  reach  about  MYR2.7bn.Industry property sales have generally slowed since 2H13, largely due to the new cooling measures as well as the festive seasons in Dec  2013-Feb  2014.  The  take-up  rate  for  The  Light  Collection  IV  (GDV: MYR520m), previewed  in Nov  2013  and priced at MYR900  psf,  has  hit 25%.  Meanwhile,  Phase  3  Bandar  Rimbayu,  which  comprises  cluster homes, will be rolled out tentatively in March.  As for the  Pantai Sentral Park  project,  this  will  only  be  launched  in  April  due  to  some  delay  in procedures while waiting for property market sentiment to recover.
• Forecasts.  In  view of the strong  9M results, FY14  will likely be a record year  for  IJMLD.  We  raise  our  FY14  core  earnings  estimate  slightly  by 5%.  Unbilled  sales  in  9M  stayed  at  MYR2bn  (MYR2.7bn  if  RMG  is included). 4QFY14 will see the handover of Collection II in Penang.
• Maintain  Buy.  We  maintain  our  BUY  rating  and  MYR3.70  FV  (on  par with RNAV/share) on IJMLD. We expect sentiment and property demand to  gradually  recover  after  the  4Q12-1Q14  trough,  and  as  IJMLD  is  a good proxy to the Malaysian  property sector,  we remain positive on the stock.

Financial Exhibits

SWOT Analysis

Company Profile
IJM Land is a reputable developer in Malaysia.  It has 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 the long-term growth: (i) The Light; (ii) Pantai Sentral Park; (iii) Bandar Rimbayu; (iv) Sebana Cove, and a few other ongoing township projects that provide sustainable earnings.

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Source: RHB