IJM Land ...Mar10

Excluding the RM10.3 million net gain arising from the disposal of a subsidiary (a special-purpose vehicle which holds PJ8 Block C) in 2Q10, IJM Land reported 9MFY03/10 normalised net profit of RM76.5 million (more than 100% rise year-on-year). This was within expectations, accounting for 71% and 74% of our and consensus estimates, respectively.

As at Dec 2009, the company has unbilled sales of about RM800 million, which represents 0.9 time of our FY10 revenue forecast. We understand that the company has achieved close to RM1 billion sales as at Dec 2009.

In view of improving property demand and economic outlook, IJM Land plans to launch the RM165 million Light Collection I in 2Q10 on a seven-acre site next to the Penang Bridge. The project will comprise 152 condominiums and 24 water villas with estimated selling price of RM650 psf and RM800 psf, respectively. The built-up areas for the condominiums range from 1,375 sq ft to 1,580 sq ft while the water villas have a built-up area of 3,169 sq ft.

As for the Light Collection II (with an estimated RM257 million gross development value), it is scheduled to be launched by 2H10. It will comprise 297 condominiums with built-up areas ranging from 516 sq ft to 3,528 sq ft with selling price from RM700 psf onwards.

Meanwhile, the company also plans to launch its RM123 million Maritime Square (mixed development comprising serviced suites, shop and office units) in May. We have incorporated these projects into our earnings forecasts.

Aggressive property launches by developers are not a surprise to us given the economic recovery and improving property demand. Rising inflationary expectation and an excess of liquidity permeating the market due to easy and cheap monetary conditions will enhance house buyers’ affordability. This will be further supported by attractive marketing packages offered by developers.

The risks to our view include: 1) competition from peers; 2) a surge in raw material costs; 3) delays in launches and approvals; and 4) country risk.