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Wednesday, April 10, 2013

RHB Research initiates coverage of Dijaya, fair value RM2

Source: http://biz.thestar.com.my/news/story.asp?file=/2013/3/19/business/20130319090555

KUALA LUMPUR: RHB Research Institute has initiated coverage ofDijaya Corporation with a Buy recommendation and fair value of RM2.

It said on Tuesday Dijaya is entering a transformation phase. The company has about 900 acres of landbank but yielding RM50bil worth of gross development value (GDV), as the popular water/sea-fronting projects make up almost half of the portfolio GDV.

“The new CEO Datuk Yau is currently spearheading a de-gearing exercise. This is a step in the right direction with net gearing targeted to be reduced to 0.5 times from 0.8 times currently. This will not only result in margin expansion, but management will be more focused on anchor projects,” it said.

RHB Research expects FY13 earnings to jump 185% to RM170mil, on the back of RM2.9bil worth of launches this year, as well as RM951mil unbilled sales.

“Land sale/trading is a new business division in FY13, and profits from this division is expected to contribute materially,” it said.

The research house said the de-gearing exercise is also necessary to strengthen the war chest to explore the M&A angle to grow the company inorganically.

Dijaya's current GDV size is already comparable to some of the top-tier developers.





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