Wednesday, January 21, 2009

2009年 20只备受瞩目的股项 : IJM Land Bhd 怡保置地

Shareholders, management known for nurturing assets

No matter how cheap they get, how well they are organised or how good their landbank is, property stocks are far from the path of recovery.

IJM Land Bhd, which was formerly known as RB Land Bhd, is no different. Despite having completed a rationalisation exercise in 2008 and emerging as one of the largest property developers in the country in terms of asset size, the stock has not captured the imagination of investors.

The value of properties under IJM Properties Sdn Bhd, which had some prime land particularly in Kuala Lumpur and Penang, alone was RM1.6 billion in August 2008. At current prices, IJM Land's market capitalisation is more than RM750 million, which is less than half the value of IJM Properties' landbank. Valuation-wise, IJM Land is trading at half its net asset value of RM1.33.

The company has shareholders and management who are known for nurturing assets, giving minorities little reason to complain. IJM Corp Bhd, the construction giant, holds close to 70% of IJM Land. Another shareholder is Peco Homebuilders (M) Sdn Bhd, a subsidiary of the Government of Singapore Investment Corp (GSIC) which has, under the rationalisation exercise, accepted IJM Land shares at RM2 each.

Even IJM Corp's entry cost into IJM Land is high. IJM Corp subscribed for the rights issue, which comes with warrants, at RM1.35 each. It sold some 60 million IJM Land warrants to its senior management at about 26 sen each. The exercise price for the conversion of the warrants is RM1.35.

At the time of writing, IJM Land was trading at 68 sen and the warrants at 19.5 sen — at a steep discount to the entry price of IJM Corp and GSIC into the company.
Considering that the major shareholders and senior management recently put their money in the stock at much higher prices than the market price, there is reason to believe there isn't much downside for the stock at prevailing prices.

In terms of landbank, IJM Land has some prime parcels that are being developed in Kuala Lumpur and Penang. It has a chunk of land in Seremban which came from a merger with RB Land and would probably see a slower take-up rate.