STOCK FOCUS OF THE DAY
Titijaya Land : Growth trajectory from land banking
moves BUY
We initiate coverage on Titijaya Land with a BUY rating and
a fair value of RM3.30/share – pegged to a 25% discount to our estimated NAV of
RM4.40/share. Our fair value implies a PE of 13x on FY15F FD EPS. Titijaya is
an under-researched mid-cap developer that is experienced in sourcing
value-accretive land deals.
The group is under the stewardship of entrepreneurial major
shareholder, Tan Sri Lim Soon Peng, who has a 61% stake and a strong appetite
for growth. Existing locked-in presales of RM550mil alone should see Titijaya
delivering a net profit of c.RM95mil in FY15F (ending 30 June) vs. an estimated
RM68mil in FY14F. For FY16F, we forecast net profit to expand by another 29% to
RM123mil. Titijaya is trading at an attractive FY15F PE of 9x vs. its larger
peers’ 15x. This is backed by solid three-year forward earnings CAGR of 30%.
Titijaya is currently developing a modern retail mall in
Shah Alam. When completed in 2017, it will have a significant 1.3mil sq ft of
net floor area. The said mall should underpin the take-up rate of its
residential presales and raise pricing points. We sense that the group may opt
to unlock the deep value of its mall, and recycle its capital to strengthen its
balance sheet for more aggressive land banking initiatives ahead. Based
on our estimated selling price of RM1,000 psf, the mall is worth about
RM1.3bil.
In just six months since its IPO debut in Nov 2013, Titijaya
has announced two prolific land deals in Brickfields and Batu Maung. Set to be
launched in FY16F, both projects are set to double Titijaya’s GDV to ~RM7bil.
Titijaya’s balance sheet remains healthy with an FY14F net gearing ratio of
0.1x. At the same time, the group could be looking to pay out c.20% of its
profits as dividends. Maiden dividends are expected in 4QFY14.
Others :
Banking Sector : Tighter LDR and higher interbank rate in
May 2014 NEUTRAL
Banking Sector : May’s foreign holdings of MGS rose by the
largest rate since Oct
2013
NEUTRAL
Economic Update : M3 moderates to +5.5% YoY in May
NEWS HIGHLIGHTS
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Mah Sing Group : Makes Ng CEO
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Telekom Malaysia : TM-UEM-Iskandar smart pact
AirAsia : Teams up with Rakuten for Japan budget airline
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