We remain positive on Tambun’s sales prospects, given its affordable township property products. Maintain BUY with MYR1.66 TP (25% upside). 2016 new sales are expected to grow 25% to MYR330m, given the new launches that worth MYR586m. This should help to replenish its current unbilled sales of only MYR324.2m.

Good turnout in the briefing. After a quiet 2015, Tambun Indah Land(Tambun) hosted an analyst briefing yesterday. Managing director Mr Teh Kiak Seng, CFO Mr Steve Neoh and general manager Mr Teh Deng Wei presented their corporate update.

Concerns on delay in approvals have eased. During the briefing, various questions on approvals were raised given that the company was not able to obtain the advertising permit and developer license (APDL) to launch new projects last year. However, we think the concerns should ease temporarily,given that the new projects – Raintree Park 2, Avenue Garden and Pearl Tropika – had received the green light to launch in Dec 2015. These three projects, with a combined GDV of MYR463m, have already achieved a booking rate of 60% thus far (Tropika was just released in March, and hence booking rate is low at >20%). The company has also submitted applications for other pipeline projects, such as Pearl Saujana Phase 1 and Pearl 28, which are slated for launch in 2H16. Management has been constantly following up with the authorities for the latest updates. Given the type of products and pricing, we expect Tambun to rake in MYR330m sales, a 25% growth from MYR263.4m.Affordable products attract home occupiers. We concur with management that affordable landed products will continue to attract owner occupi ers.Although another developer in the proximity is selling at MYR700 -800k for a terrace house, a similar house type in Tambun’s established Pearl Citytownship is currently priced at MYR450k (7% increase YoY), which is more affordable for the mass market, and at the same time maintaining the upside in pricing once the property market recovers.

Prudent on landbanking. Management has been prudent in its landbanking exercise and the company has accumulated a solid war chest which wouldcome in handy once opportunities arise. While many land parcels were offered, Mr Teh believes that 2017 would see better opportunities. We agree with his view. Currently, Tambun has a remaining landbank of 675 acres, and should last for another eight years.

Maintain BUY. We maintain our BUY rating with unchanged MYR1.66 TP, based on 35% discount to RNAV. Although the current property market is challenging, we think Tambun has the right products that should continue to capture the first-time home buyers, and upgraders from Penang, which have been the trend over the past years (ie less property investors).