HLG maintains hold on IJM Land

IJM Land Bhd is the latest property firm to offer an easy payment scheme for its customers under the My Space Plan.

With 16 projects on offer and an expected RM875 million in new launches in FY2010, HLG Research is confident that IJM Land will be able to achieve its RM250 million new sales target from the campaign.

The recent soft launch of Summer Place in Penang alone has garnered around RM60 million in bookings, said HLG, adding that it expected fourth-quarter (4Q09) earnings to be slightly lower compared to 3Q09, due to higher interest expense as a consequence of higher debt levels to repay inter-company loans and persisting low margins.

“Overall, FY09 results are not reflective of the enlarged entity going forward, as we believe kitchen sinking and one-off items like merger costs, rebranding costs and debt restructuring costs, will not recur.”

Some 2,700 acres of land under the Canal City project had been alienated to the JV company Canal City Construction Sdn Bhd, and the renegotiation on the flood mitigation project will have minimal impact on IJM Land.

HLG also said it expected the Canal City renegotiation to have minimal impact.

The research house has not imputed potential earnings from Canal City in its forecasts due to its long dated gestation and lack of a concrete masterplan.

HLG reaffirmed its hold call on IJM Land at 83.5 sen, with sum of the parts valuation derived price target of 89 sen per share imputing RM17.7 billion in future property launches.

It said FY09 results are expected to be disappointing, although not reflective of IJM Land’s long-term potential.

FY10 earnings are backed by RM800 million of unbilled sales and the expected RM875 million new launches. IJM Land’s high net gearing level of 0.6 times (0.4 times excluding redeemable convertible unsecured loan stocks), constrained IJM Land’s potential to grow its landbank during the current slowdown, said HLG.

IJM Land added six sen to 89.5 sen yesterday.

By The EDGE Malaysia