Wednesday, July 30, 2014

AmWatch - Titijaya : Game for two more prime Klang Valley plots, 30 Jul 2014

STOCK FOCUS OF THE DAY
Titijaya : Game for two more prime Klang Valley plots  Buy

We maintain our BUY call on Titijaya Land Bhd with an unchanged fair value of RM3.30/share - a 25% discount to its NAV/share of RM4.40. The Star reported that Titijaya is eyeing two parcels of prime development land within the Klang Valley.The first revolves the development of a piece of land located between Subang Jaya Komuter Station and Shah Alam which may also involve the construction of KTMB’s new headquarters. The second involves a 4ha-plot (~ 10 acres) of land located in Ampang.
This latest developments merely reinforces our view of Titijaya’s moves to secure prime development land within Klang Valley. If it is successfully pushed through, we expect the re-development of the KTMB land to be well received, given its strategic location within the matured neighbourhoods of Subang Jaya and Shah Alam.
Furthermore, the move is timely as Phase 2 of its Subang Parkhomes development is set to be completed by end-2014. However, The Star report added that the project will likely only kick off in 2016. Similarly, we believe that the Ampang land – located near the Ampang-Kuala Lumpur Elevated Highway (AKLEH) – has healthy development potential. Our channel checks indicate that the said land is located nearby a host of prime amenities and developments such as Mah Sing’s M City.
Earlier this month, Titijaya announced that it will take up a 70% stake in an entity accorded with a provisional award for a joint development on a 5-acre plot of land located along Jalan Eaton near KLCC. On our estimates, such a move would likely bump up Titijaya’s development GDV closer to RM10bil from ~RM7bil currently. We maintain our BUY call on Titijaya, given the increasingly robust land banking and pre-sales momentum. This should help narrow the steep 39% discount that the stock is trading vis-a-vis its NAV of RM4.40/share. 

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