By Kenanga Research
Fair Value: RM4.05
I-BHD has revised upwards its i-City gross development value (GDV) to RM7.5bil due to higher average selling prices (ASP) of RM800 per sq ft from a GDV of RM5bil (ASP of RM600 per sq ft) since the last report in November last year by Kenanga Research.
Kenanga Research said the GDV excluded I-Bhd’s latest flagship project The Jewel that has a GDV of RM2bil, which was expected to sell at an ASP of RM1,480 per sq ft when it is launched in 2016.
The inclusion of The Jewel would further push its GDV upwards by another 28% to RM9.5bil.
The research house said that while I-Bhd aspired to sell its properties at an ASP of RM1,480 per sq ft, it opined that i-City would need to convincingly break the RM1,000 per sq ft barrier, which could take a longer time beyond 2016.
Nonetheless, Kenanga Research said it was still positive given that any upward revision in ASP would translate to a better margin for I-Bhd.
It added that I-Bhd had unbilled sales of RM400mil with at least two years’ visibility.
Kenanga Research projected I-Bhd property division’s topline to grow by 84.5% and 78.7% year-on-year in financial year 2014 (FY14) and FY15 to RM177.3mil and RM316.8mil respectively, assuming conservative sales by the group.
Meanwhile, for I-Bhd’s leisure division, it expects at least 20% topline growth given that it would be one of the key tourist spots within Visit Malaysia Campaign that, in turn, translated into 24% of its estimated FY14 earnings of RM60.9mil.
Kenanga has a “trading buy” recommendation on I-Bhd stock.
By CIMB Research
Target price: RM2.88
AirAsia has been experiencing tough conditions in all of its markets for different reasons, particularly since the middle of last year.
There are no immediate solutions but AirAsia is clearly taking action to address the challenges.
CIMB Research said AirAsia Philippines and Zest Air were the two least important of all of AirAsia’s associates, and it would not be surprised if they could be ultimately sold or closed down.
It said Indonesia AirAsia’s losses should narrow with the capacity measures taken, though investors would have to live with start-up losses in India and Japan for a few years.
Meanwhile, it said yields in Malaysia were inching up but there were no big upward moves yet.
For this, CIMB Research said AirAsia had cut capacity from Kuala Lumpur to Kota Kinabalu, Kuching and Singapore to align supply with demand, but redeployed capacity to Kota Bahru and Senai to build new growth opportunities.
It added that Thai AirAsia had cut fleet growth from eight to six planes this year and would focus on growing capacity from Chiangmai and Phuket at the expense of conflict-ridden Bangkok while Indonesia AirAsia had reduced aircraft daily utilisation by cutting marginal routes, partially offset by frequency additions on six to seven trunk domestic routes, in order to reduce the losses caused by rupiah depreciation, with breakeven targeted for third quarter this year.
CIMB Research said AirAsia Philippines and Zest Air were also working to reverse losses by fourth quarter this year. Separately, it said AirAsia India would launch tomorrow with just one plane, and that the new AirAsia Japan might be announced next month for potential launch in 2015.
BERJAYA AUTO BHD
By RHB Research Institute
Target Price: RM3.20
RHB Research Institute expects Berjaya Auto Bhd (BAuto) to book a record quarter in its fourth quarter of financial year 2014 (FY14), with earnings of around RM48mil along with record-high margins achieved during the period.
It said these were helped by a better sales mix, reduction in import duties, favourable ringgit/yen rate and increased localisation.
RHB Research attributed the robust performance to BAuto’s flattish overhead costs.
BAuto is expected to announce its fourth-quarter results today. Going forward, RHB Research said the aggressive expansion of BAuto model line-up and completely-knocked-down (CKD) operations would fuel growth.
It said BAuto’s five upcoming launches of new models included the new Mazda2 and the smaller CX-3 sport-utility vehicle over the next three years.
RHB Research said its recent talk with BAuto management suggested that the third model would be the MX-5.
Meanwhile, it added that the commissioning of the Inokom plant was on schedule and that the CKD Mazda3 and Mazda6 models were expected to hit the market by fourth quarter FY14 and first quarter FY15 respectively.
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