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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