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Tuesday, August 20, 2013

Tambun Indah Land - Strong As Expected


TILB’s 2Q13 results came in within our expectation. Property sales in 1H increased to MYR343m from MYR177m in 1Q13. The Penang State Government recently called for request for proposal (RFP) for the development of an international theme park and golf course. These are expected to lift the development potential on the mainland to another level. We, therefore, raise our FV to MYR1.82. Maintain BUY.

- Within expectations. Tambun Indah (TILB)’s 2Q13 results came in line with our expectation. About 62.3% of the revenue from the property development division was contributed by the Pearl City township.  Property sales up to MYR343m. 1H13 property sales surged 94% to MYR343m from MYR177m in 1Q. Pearl Residence (MYR115m), Pearl Impian (MYR49m), Pearl Avenue (MYR48m) and Straits Garden (MYR67m) were the key contributors. The average take-up rate achieved at its ongoing projects, with a GDV of MYR1.32bn, was 73.3%.

- Placement exercise completed. TILB recently completed a 15m share placement to two institutional funds at an issue price of MYR1.32 per share. Its market cap, as a result, rose to MYR515m. An EGM will likely be held in mid-Oct to seek shareholders’ approval for the acquisition of the minority stake in the Pearl City project from Nadayu Properties (NPB; NR). Subsequently, 55m shares will be issued at MYR1.30 per share.

- Forecasts. We make no changes to our earnings forecasts. Unbilled sales amounted to MYR510m in 2Q13, from MYR425m in the previous quarter. TILB’s earnings will be boosted from early-4Q onwards upon the completion of the acquisition from Nadayu, as the minority interest charge in the P&L will be largely eliminated

- Maintain BUY. We raise our FV to MYR1.82 (from MYR1.71), based on a lower 15% discount (from 20%) to RNAV. Further opportunities have opened up following the Penang State Government’s recent call for RFP for the development of an international theme park and golf resort projects at Batu Kawan. Meanwhile, results of the RFP on the premium outlet are expected to be announced over the next few months. Acknowledging the positive spillover from these developments, the major shareholders of Asas Dunia, which owns 1,500 acres of land on Penang mainland, has recently offered to take over their company at MYR1.70 per share.

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