Wednesday, August 12, 2009

Why I Like IJM Land




Property is hot again, and many property counters have been moving quite a bit. I particularly like IJM Land at levels below RM1.85. Its a prime beneficiary of asset reflation. Its RNAV is close to RM3.10. But of course it will not get to that level anytime soon.

IJM Land's star is hitched onto two projects: one is The Light project in Penang. Recent good take up rates for neighbouring launches such as Platino and Nautilus Bay gives a good indication that The Light (currently has launched Light Linear and Light Point) will do well too. The scrapping of the huge but controversial PGCC actually puts the spotlight back on The Light as the primero uno projecto in Penango. Pardon my Japanese.

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The other is its strategic location of its latest property development project in Nusa Duta. The project is different from other existing and on-going projects within a 5km radius from Nusa Duta as it did not have commercial properties within its plot. The project is surrounded with existing and upcoming conveniences and facilities developed by other developers, such as Bukit Indah AEON shopping mall, banks, schools, fast food outlets, a police station and Giant and Tesco hypermarkets which will open by the year-end and early 2010. There is also the on-going RM1.3bil new coastal highway linking Nusajaya and the Johor Baru city centre, which will pass through the project, and would boost accessibility to Nusa Duta.

Presently, IJM Corp has 4.04ha in Permas Jaya and 101.17ha in Mount Austin, both within Iskandar Malaysia, and 477.52ha in Sebana Cove in Kota Tinggi district in the eastern part of Johor. When IJM Land Bhd acquired 1,188 acres in Johor’s Sebana Cove marina from AMDB Bhd last August for a mere RM120 million, many were sceptical. Now its worth a whole lot more money.

Has an issued capital of 1.1bn shares, a 52 week high-low of RM2.28-RM0.55. The other thing is that the counter has a limited free float which makes it very easy to see its share price move just catching the right trend. IJM Corp has 77% in IJM Land locked up while Singapore's giant GIC has 7%. The trend is now, Property is hot and I think it can take out its 52 week high easily.

IJM LAND BHD's pre-tax profit for financial year ended March 31, 2009 rose to RM68.303 million from RM54.893 million in the same period of 2008. In actual fact, the real operating results of IJM Land was a lot better save for certain one off items which dragged down profits, legacy issues from the merger with RB Land. Has one of the lowest net gearing ratio among its peers at 0.2x, the rest are around 0.5x. Can gear up to take advantage of any decent opportunity.


p/s photos: Kanjiya Shihori


14 comments:

Ooi Beng Hooi said...

The parent IJM just sold 40million shares of IJMLand (dated 3 Aug 09)

Salvatore_Dali said...

so??!!

Ooi Beng Hooi said...

Unless IJM needs to raise cash soon, why they sold IJMLand if they think the chance of the share price going up is higher?

Only the seller knows best.

Salvatore_Dali said...

look at what ijm is holding... selling the stock down is needed to improve the free float... i think bursa is already breathing down their neck on them to improve the free float ratio

saukheng said...

Johor, more specifically JB has the nation's highest property overhang. As per Property Market Report 2008, Johor has 7000 residential units worth RM1 billion and 2,300 shops worth RM0.5 billion completed and unsold. In addition there are about 12,000 housing units that are unsold but under construction.
In present soft market, coupled with Johor poor demographics and serious crime/security issues....will IJM Land being a relatively new player in JB can achieve their sales targets under these unfavourable climate

hng said...

A lot of property counters already reach before crisis level (KSL, Glomac, YNH, SP setia, Sunrise, Suncity etc). Room for further upside seem limited.

Dali, could you please give some comment on two counters: Kfima and OIB. I have done some research on these two property counter: Kumpulan Fima (through 60% Fimacorp) and Oriental interest (OIB).

1) Kumpulan Fima
Apart form upcoming dividend of 3sen, Kfima is alernative to fimacorp (60% subsidary) to indirectly expose to concessionaire secruity printing business, which is solid cash cow.

With gradually mature palm oil plantation in indonesia, fiamcorp has make turnaround and report huge profit jump in plantation division.

Recently, Kfima also increase its property portfolio by exchange 4 parcel of leaseland to 14 office units at Tower B, PJ Trade Centre.

Hence, current earning driver for KFima are Manufacture secruity priniting, plantation (both through Fimacorp), bulking and property investment income.

In turn of valuation, Kfima is one of the still undervalue stock in the market now. EPS 2008: 17.7sen, NTA: 1.27, nearing zero gearing; dividend: 3sen. If based of historical PE:5x, Kfima potential subject to re-rating up to 88sen.

2) Oriental interest (OIB)
OIB is property counter mainly develop property in Kedah and manufacure rubber wood product, but through associate company, it also derive profit from palm oil plantation.

OIB is cash rich company (net cash per share : 75sen/share) and high dividend: 10sen (9.1% yield). OIB may rich in valaution in turn of PE, but its NTA is at RM3 and almost 70% current share price is consist of cash value. Expect to propose its dividend together its Q4 result by this month

solomon said...

May I know how you derive the RM120million price tag on the purchase of land from AMDB? Do you include the debt transfer price as well?

Do share, many thanks.

Eric How, said...

1 thing ab IJM is their ppty sell expensive......
Time to buy ppty....Cheap rate + Good appreciation....Like Tropics above Tropicana City. 6 mth ago sell 250K (625sf), Now sell at 290K++ (625sf).
40K earn of your 10% downpayment(25K)
Still under-con la. pay rm0 repayment for 12 mth.....
What a buy?

jeremy tan said...

Dear Slavatore Dali, just for your information, majority of the take ups for the light are by their own staff. I was there to witness the whole event. Cheers.

There is one thing i notice that for every single analyses written by financial companies, the analysts fail to mention global warming as an issue that will affect their projections in the near future.

The ice caps in Greenland are melting faster than we can imagine. At the rate we are emitting carbon dioxide into our atmosphere it's just the matter of time before the sea levels rises.

Not to mention the tundra ice are melting as well and in that process it release methane which is 12 times more effective in causing global warming as compared to C02.

The light project by IJM is situated at the waterfront.
Besides that, it is built on reclaim land.
The recent launch of the light linear were taken mainly by their own staffs which by my calculations are not capable of purchasing such units in bulk.
One of the staff book 15 units!!
These form of purchasing creates a false demand because in reality they are not capable of financing such amount.
Thanks to the 5:95 home loans/mortgages offered by banks at the moment and IJM's support to their own staff to boost demand (false demand).
Speculators are involved in pushing the price up for this project.
I can name you a few downfalls of the light linear and its shortcomings if you are interested. Just my analyses by me.

Just my 2 cents.
Cheers,
Jeremy.

Admin said...

more than double in just 4 mths, still got more legs to rally? u only like it now? should have liked it earlier mah

jeremy tan said...

Dear Salvatore Dali,

I was at the launch of the light linear recently by IJM.
Majority of the bulk buyers were their own staffs (sales person).
Some even book up to 20 units.
By right financially they are not capable of financing so many units.
It has always been known that this is part of their marketing strategy.
To create a false demand, and later on hoping to sell it at a higher price.
Furthermore, that condominium is build on reclaim land.

One thing i notice is that many analyst failed to take in account the effect of global warming.

I spoke to a barclays capital analyst recently and he told me that properties located at the waterfront will be affected in the future.
This is because the ice caps in Greenland is melting at a rate that has never been imagined before.
At the rate we are emitting carbon dioxide it is just the matter of time before the sea levels rises to a dangerous level.

Not to mention the ice that is melting at the tundra.
It releases methane which is 12 times more potent than C02 in global warming.

IJM might be selling stocks to improve the free float.
However, i believe they require funding for their incoming projects.
They had a couple of projects which are not doing too well. Eg. The Spring
The same strategy was employed to boost a false demand.
Later on, the units were released in the market.


Just my 2 cents.

Cheers,
Jeremy

chauky said...

I am a new reader to your blog. Everytime you recommend a share, it will rocket up the same day or the next day. Is there any way that I can obtain the info earlier before it is published? Thanks. Your blog is extremely good.

Nadhir Ashafiq said...

I've always shunned so called stock 'tips' on the net. But somehow a certain gut feeling told me to follow you on this call. I entered at 1.81 yesterday. (Yes I knew the risks etc etc, I wasn't going to blame anybody if the trade went sour. :) )

Spot on.

James said...

Dali,

What is your view on DNP? I know they have launced 2 high end property projects.