PROPERTY DEVELOPMENT

IJM LAND
(IJMLD MK, IJMLAND.KL)

4 December 2013

Fast & furious start for Bandar Rimbayu

Company report
Hoy Ken Mak mak-hoy-ken@ambankgroup.com +603 2036 2294
Price Fair Value 52-week High/Low Key Changes Fair value EPS YE to Dec Revenue (RMmil) Core net profit (RMmil) EPS (Sen) EPS growth (%) Consensus EPS (Sen) DPS (Sen) PE (x) EV/EBITDA (x) Div yield (%) ROE (%) Net Gearing (%) Stock and Financial Data Shares Outstanding (million) Market Cap (RMmil) Book value (RM/share) P/BV (x) ROE (%) Net Gearing (%) Major Shareholders 1,415.6 3,666.5 1.86 1.4 8.5 n/a IJM Corp (64.2%) EPF (6.5%) 24.2 1.9 3mth (6.3) (6.0) 6mth 4.7 (1.4)
1,916

BUY
(Maintained)
Rationale for report: Company Update
Investment Highlights

RM2.59 RM3.86 RM3.30/RM2.01

unchanged unchanged FY13 1,250.1 214.9 14.1 19.1 5.0 15.3 9.5 2.3 8.2 Net Cash FY14F FY15F FY16F 2,229.2 374.9 24.0 18.1 26.3 7.0 10.8 7.5 2.7 10.5 0.0

Maintain BUY on IJM Land with an unchanged fair value of RM3.86/share (10% discount to its NAV). We attended the official launch of The Arc a social hub at IJM Lands Bandar Rimbayu project yesterday. We came away impressed with its rapid progress basic infrastructure/building works is already in full swing. Apart from The Arc, a link-road Kota Kemuning is now ready. Another access road to SKVE/ELITE should be completed within two years along with a clubhouse. Bandar Rimbayu enjoys excellent connectivity to five major highways and is a mere five-minute drive to Kota Kemuning and ~3km away from a future link to SKVE/ELITE via Bandar Saujana Putra. With its strategic location, well-crafted designs (ring concept/low-density layout) & green-themed landscape, Bandar Rimbayu is on an accelerated growth path much like how well-established townships such as Desa Park City and Setia Alam were in their early years. Despite the governments recent cooling measures on the property market, we expect Bandar Rimbayu to continue its forward march. Rising land prices within KL city centre are triggering an outward migration towards outlying areas particularly for landed products. Hence, its reasonably-priced landed units are well-placed to tap into an expanding upgraders market. Furthermore, Bandar Rimbayus deepening prospects will likely receive a significant kick as the increasing presence of reputable developers nearby should expedite capital values within this matured but fastexpanding South Western corridor of Klang Valley. The original land cost for Bandar Rimbayu is only RM5psf, compared to ~RM18psf (based on NPV) that Tropicana Corp has paid for 1,172 acres of land near Bandar Rimbayu (total cost: ~RM1.3bil). Our channel checks reveal that several other developers are eyeing another large parcel of land (~1,000 acres) within the vicinity. Phase 1 (Chimes) & 2 (Perennia) of Bandar Rimbayu have already achieved strong take-up rates of over 85% and 70% since their launches in March and late-August respectively (non-bumi portion: fully-taken-up). The starting price for Phase 3 of Bandar Rimbayu - to be launched in Jan-2014 (cluster-semi-detached homes) will likely be higher at over RM800k compared with ~RM580k and RM640k for Phases 1 & 2 respectively. We

1,566.8 1,780.2 284.7 317.5 18.4 20.4 30.3 10.4 20.0 23.9 6.0 6.0 14.0 12.7 10.2 8.8 2.3 2.3 9.8 9.7 Net Cash Net Cash

Free Float (%) Avg Daily Value (RMmil) Price performance Absolute (%) Relative (%)
4.00

12mth 24.2 16.5

3.00

1,595

Index Points

(RM)

2.00

1,274

1.00

953

0.00
Jun-09 Jun-10 Jun-12 Jun-13 Dec-08 Dec-09 Dec-10 Jun-11 Dec-12 Dec-13 Dec-11

632

IJM Land

FBM KLCI

IJM Land

4 December 2013

CHART 1: STRATEGIC LOCATION OF BANDAR RIMBAYU

Source: IJM Land, AmResearch

OTHER TAKEAWAYS RIMBAYU SITE VISIT

The Arc officially launched

FROM

BANDAR

Basic infrastructure re works are also in full swing where IJM Land is clearing huge swathes of previously plantation land. The road link to Kota Kemuning has been completed and is now accessible to traffic. We understand that the first batch of residents at Bandar Rimbayu would use this road as an exit point out of the township. On the other hand, a second access road is currently being built. It links Bandar RImbayu to Bandar Saujana Putra, and subsequently sequently to ELITE/South Klang Valley Expressway (SKVE). To further enhance its appeal, IJM Land is set to build a clubhouse that will likely be ready in two to three years time.

We attended the official launch of The Arc, a social centrepiece at its Bandar Rimbayu project near Kota Kemuning. Bandar Rimbayu is a JV with Kumpulan Europlus under a 60:40 partnership. Key management of both IJM Land and parent IJM Corp were present at the event. . They include Tan Sri Krishnan Tan (Chairman of IJM Corp), Dato Teh Kian Meng (MD of IJM Corp), Dato Soam am Heng Choon (MD ( of IJM Land and Deputy MD of IJM Corp), Edward Chong (COO of IJM Land) and Shuy Eng Leong (COO of Bandar Rimbayu). The Arc measures approximately 100,000 sq ft, and is aimed at creating a space social interaction within the Bandar Rimbayu community. It is centrally located within the Flora precinct that mainly consists of linked homes. Management shared that The Arcs early launch near the entrance to IJMs first two phases near Kota Kemuning (i.e. Chimes and Perennia) is also aimed at showcasing something tangible for its future home buyers/investors.

Cutting-edge connectivity
A key attraction of Bandar RImbayu is its unparelled unparel access to five major highways out of which four are existing ones. Bandar Rimbayu straddles SKVE at the latters immediate southern boundary; KESAS/Lebuhraya Kemuning Shah Alam (LKSA) to the north via Kota Kemuning; ELITE highway to the East and the proposed West Coast Expressway (WCE) to the west. Most importantly, Bandar RImbayu is a mere five minutes drive away from Kota Kemuning and only 3km away from Bandar Saujana Putra en en-route to ELITE/SKVE.

Major infrastructure works underway

We came away impressed with what we saw from this green-themed project, IJMs s largest ever township development to-date (1,878 acres).

IJM Land

4 December 2013

Phase 3: to be launched early-2014

Leveraging on the early successes of Phases 1 & 2 (Chimes and Perennia), we expect IJM Land to launch Phase 3 of Bandar Rimbayu by January 2014. From our observations, Bandar Rimbayus homes offer relatively generous built-ups. The standard intermediate unit for Phases 1 (22x75/24x75) & 2 (22x80/24x80) measure c.2,100 sq ft and 2,500 sq ft respectively on average. We also observed that a corner-lot show unit (24x75) with an additional 3 feet of land area can feet an island kitchen. The maid rooms for some also come with a detached toilet at the back. The first batch of homes under Phase 1 is due to be completed earliest by end-2014 where work progress for some units has already reached 65%. Phase 3 will mainly comprise over 400 units of cluster semi-detached homes with built-ups of 32x70. This would be followed suit by Phases 4 and 5 that will come with linked detached homes and strata-titled units respectively as well as shop lots under Phase 6 by 4Q14. We understand that IJM Land would likely launch 40 units of shop lots to kick off the commercial component of this township. We expect the indicative pricing to be RM1mil and above, and will either be three or four storeys. Other components in the future may include a retail mail, schools, hospitals, big box retail outlets as well as a town square. Once this self-contained township achieves a certain level of maturity, we expect IJM Land to introduce the Bayu precinct offering high-end waterfront products that are similar to The Lights project in Penang.

Providing sustainable pre-sales of over RM1bil from FY14F onwards

We anticipate Bandar Rimbayus pre-sales to reach ~RM1bil next year vs ~RM600mil this year providing IJM Land with a sustainable GDV base over its development period of 10 to 15 years. The projects total indicative GDV is estimated at ~RM11bil. IJM Land delivered strong new sales of RM1.2bil for 1HFY14 putting the group on track to beat the RM2bil achieved for the whole of FY13. The strong progress billings during the first half of the current financial year were partly down due to maiden contributions from ongoing building works for Phase 1 of Bandar Rimbayu. Physical progress at some units of Phase 1 has already reached 65%. AmResearch Sdn Bhd 3

IJM Land

4 December 2013

PICTURE 1: PROGRESS AT PHASE 2 (PERENNIA) WORKS UNDERWAY

Source: IJM Land, AmResearch

PICTURE 2: PROGRESS AT PHASE 1 (CHIMES) - ALREADY REACHING THE ROOF

Source: IJM Land, AmResearch

AmResearch Sdn Bhd

IJM Land

4 December 2013

PICTURE 3: OFFICIAL OPENING OF THE ARC

Source: IJM Land, AmResearch

PICTURE 4: ARIAL VIEW OF THE ARC

Source: IJM Land, AmResearch

AmResearch Sdn Bhd

IJM Land

4 December 2013

PICTURE 5: PROPOSED LINK FROM BANDAR RIMBAYU TO SKVE/ELITE

Source: IJM Land, AmResearch

PICTURE 6: SHOW HOUSE (24X75 CORNER LOT)

Source: IJM Land, AmResearch

AmResearch Sdn Bhd

IJM Land

4 December 2013

TABLE 1 : FINANCIAL DATA

Income Statement (RMmil, YE 31 Dec) Revenue EBITDA Depreciation Operating income (EBIT) Other income & associates Net interest Exceptional items Pretax profit Taxation Minorities/pref dividends Net profit Core net profit Balance Sheet (RMmil, YE 31 Dec) Fixed assets Intangible assets Other long-term assets Total non-current assets Cash & equivalent Stock Trade debtors Other current assets Total current assets Trade creditors Short-term borrowings Other current liabilities Total current liabilities Long-term borrowings Other long-term liabilities Total long-term liabilities Shareholders funds Minority interests BV/share (RM) Cash Flow (RMmil, YE 31 Dec) Pretax profit Depreciation Net change in working capital Others Cash flow from operations Capital expenditure Net investments & sale of fixed assets Others Cash flow from investing Debt raised/(repaid) Equity raised/(repaid) Dividends paid Others Cash flow from financing Net cash flow Exchange rate effects Net cash/(debt) b/f Net cash/(debt) c/f Key Ratios (YE 31 Dec) Revenue growth (%) EBITDA growth (%) Pretax margins (%) Net profit margins (%) Interest cover (x) Effective tax rate (%) Net dividend payout (%) Debtors turnover (days) Stock turnover (days) Creditors turnover (days) Source: IJM Land, AmResearch 2012 1,206.0 261.4 (8.0) 253.5 (7.0) 35.3 0.0 281.9 (81.6) (6.6) 193.7 193.7 2012 175.8 0.0 1,387.8 1,563.6 625.3 178.0 623.2 1,476.3 2,902.8 666.7 112.8 1.9 781.5 286.8 918.2 1,205.0 2,429.6 50.4 1.75 2012 281.9 196.3 (231.5) (7.6) 50.8 (4.5) 0.1 (166.2) (170.6) 51.4 45.6 (55.0) 11.1 53.2 (66.6) 0.5 691.4 625.3 2012 3.8 n/a 23.4 16.1 7.7 28.9 24.5 180 62 227 2013 1,250.1 315.3 (8.8) 306.6 (10.1) 23.6 0.0 320.1 (89.0) (16.2) 214.9 214.9 2013 176.2 0.0 1,698.9 1,875.1 607.9 166.8 456.3 1,973.5 3,204.6 808.3 110.7 13.4 932.5 414.1 1,039.8 1,453.9 2,626.8 66.6 1.86 2013 320.1 251.4 (156.9) (22.0) 150.0 (7.1) 0.0 (201.4) (208.5) 125.2 36.8 (55.9) (69.6) 36.4 (22.1) 4.8 625.3 607.9 2013 3.7 20.6 25.6 17.2 9.1 27.8 31.9 158 50 215 2014F 1,566.8 391.0 (9.3) 381.7 16.4 21.6 13.9 433.6 (108.4) (26.6) 298.6 284.7 2014F 179.0 0.0 1,795.9 1,974.9 529.1 198.4 579.5 2,526.9 3,833.9 1,127.5 121.0 13.4 1,261.9 363.8 1,039.8 1,403.6 3,050.1 93.2 1.95 2014F 433.6 (243.0) (389.0) (221.6) (167.7) (10.0) 0.0 14.2 4.2 (40.0) 195.4 (70.8) 0.0 84.7 (78.9) 0.0 607.9 529.1 2014F 25.3 24.0 27.7 19.1 10.1 25.0 21.1 121 43 225 2015F 1,780.2 455.9 (9.6) 446 15.8 23.4 0.0 485.5 (121.4) (46.6) 317.5 317.5 2015F 181.4 0.0 1,894.6 2,076.0 492.0 223.5 575.5 2,762.0 4,053.1 1,197.3 125.0 13.4 1,335.7 339.8 1,039.8 1,379.6 3,274.0 139.7 2.10 2015F 485.5 0.6 (186.4) (234.4) 74.3 (10.0) 0.0 12.3 2.3 (20.0) 0.0 (93.6) 0.0 (113.6) (37.0) 0.0 529.1 492.0 2015F 13.6 16.6 27.3 17.8 12.1 25.0 25.4 118 43 238 2016F 2,229.2 559.3 (9.9) 549.4 36.7 22.5 0.0 608.6 (153.9) (79.8) 374.9 374.9 2016F 183.6 0.0 2,015.7 2,199.2 281.2 281.8 671.8 3,353.6 4,588.3 1,509.7 126.0 13.4 1,649.1 323.8 1,039.8 1,363.6 3,555.2 219.6 2.28 2016F 608.6 (174.0) (433.7) (285.9) (101.1) (10.0) 0.0 8.9 (1.1) (15.0) 0.0 (93.6) 0.0 (108.6) (210.9) 0.0 492.0 281.2 2016F 25.2 22.7 27.3 16.8 15.1 25.3 26.9 102 41 222

AmResearch Sdn Bhd

IJM Land

4 December 2013

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