Neutral view on IJM


IJM LAND BHD

By Affin Research

Buy (maintained)

Target price: RM3.77

IJM Land to jointly develop a 15-acre Segambut land with FCW Holdings Bhd.

IJM Land announced that the group had on Sept 19 entered into a shareholders’ agreement with FCW to form a 50:50 joint-venture (JV) company to undertake a mixed development project on four parcels of freehold land in Segambut, Kuala Lumpur.

The JV company had on the same day entered into two conditional sale and purchase agreement with FCW Holdings Bhd to acquire the four parcels of freehold land in Segambut (15.4 acres) for RM188mil or RM280 per sq ft (psf).

We are “neutral” on the JV and land acquisition – the acquisition price of RM280 psf is comparable with the RM270 psf paid by UOA Development recently for an 11-acre piece of freehold land in Jalan Ipoh but higher than the RM135 psf paid by Mah Sing for a leasehold land in Taman Wahyu.

IJM Land has yet to announce the detail development plan and project gross development value. Maintain “buy” with an unchanged target price of RM3.77.

No change to our earnings forecast for now, pending completion of the transaction and further details on the Segambut development project. IJM Land (alongside Sunway) is our top pick for the property sector.

We like IJM Land for its strong management, good brand equity, good geographical diversification, excellent product mixed, impressive 31% earnings compounded annual growth rate over financial years 2013 to 2016 (FY13-16E) and undemanding valuation.

Pestech International Bhd

By RHB Research

Buy (maintained)

Target price: RM2.82

PESTECH secured its first contract in Laos to construct a 115kV double-circuit transmission line spanning from Pakse, Laos to the Laos-Thai border on a turnkey basis.

The scope of work of the project involves the establishment of a 115kV overhead transmission line (about 40km in length) linking Bangyo S/S in Pakse and Sirindhorn S/S in the Laos-Thai border to maximise the capacity of power transfer between the two countries.

The project, awarded by Electricite du Laos (EDL) which is worth US$29.3mil (about RM92.1mil based on RM3.15: US$1), is expected to start construction by December 2013 and be completed within 18 months.

EDL has been working with Electricity Generating Authority of Thailand to supply energy to Thailand. Given the rising energy demand in Thailand, the new double-circuit transmission line would complement the existing single-circuit line.

Laos is a landlocked country with limited energy resources. Nevertheless, it is able to capitalise on the huge hydropower potential from the Mekong River that flows through the country. According to Laos’ 7th National Socio-Economic Development Plan (2011-2015), the government intends to build 10 large dams to generate 5,015MW of electricity.

The government aims to increase the household electrification rate from 65% in 2012 to 80% by 2015, and subsequently to 90% by 2020. Due to this geographical advantage, the country has been commonly referred to as the hydropower “battery” of South-East Asia.

Year-to-date orderbook replenishment of RM187.8mil. Thus far, Pestech has been able to replenish its orderbook by an additional RM187.8mil, exceeding our previous forecast of RM175mil.

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Business , Pestech , IJM Land , BToto

   

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