IJM Land Bhd (April 28, RM1.34)

BUY. We are re-initiating coverage on IJM Land with a "buy" and fair value of RM2.40 per share, based on 40% discount to our estimated fully diluted NAV of RM4 per share. Its flagship integrated waterfront project, the 137ha The Light Waterfront Penang (The Light), accounts for 37% of our NAV. Balance sheet is strong with an estimated net gearing of just 24%.
We are forecasting earning to rise from RM84 million in FY3/2009E, with consolidated six-month profit contributions from IJM Properties, to RM130 million in FY2010F, RM217 million in FY2011F and RM 270 million in FY2012F.
Three-year earnings CAGR is strong at 49% over FY2010 to FY2012F, to be booted by the maiden launch of The Light, which has a GDV of RM5.2 million in the third quarter. This aside, our earnings estimates are also underpinned by unbilled sales of RM700 million as well as steady pre-sales from its existing projects, include Seremban 2, S2 Heights, Taman Perling and Bandar Utama Sandakan. Annual pre-sales are expected to rise from RM750 million in FY2010F to more than RM1 billion in FY2011F, with the lauch of The Light Collections and seafront bungalows (GDV: RM900 million). At RM1.31 per share, it is trading at a steep discount of 67% to our NAV.