Tambun Indah Land Bhd
(March 1, RM1.37)
Maintain “buy” with a lower target price (TP) of RM1.66: While we are still positive on Penang mainland’s market, given weaker overall property market conditions, we lower our TP for Tambun Indah Land Bhd to RM1.66 TP (from RM1.81), based on a higher 35% discount to our updated revised net asset value (from 30%).
We expect Tambun Indah to rake in higher sales of about RM330 million this year as it has just received the advertising permit and developer licence (APDL) to launch Raintree Park 2, Avenue Garden and Pearl Tropika. These three projects have a combined gross development value (GDV) of RM446 million (RM95 million, RM205 million and RM146 million respectively), and have already achieved a booking rate of about 40% to 50%. In the fourth quarter of 2016 (4Q16), Tambun Indah also plans to roll out Pearl Saujana 1 with a GDV of RM102 million. All of these are affordable housing as their pricing is around RM300,000 to RM450,000 per unit.
New sales reached RM70 million in 4Q against RM22 million in 3Q when Tambun Indah was still awaiting the APDL. Its full-year sales amounted to RM263.41 million, down from RM429.11 million in 2014, given the slow approval process.
We make minimal changes to our earnings projections. Tambun Indah is now almost in a net cash position. Meanwhile, unbilled sales declined to RM324 million from RM343 million in 3Q15. Key risks are: i) delays in approvals and ii) worse-than-expected market conditions.
Against the industry trend, Tambun Indah’s gross margin expanded to 41% from 34% in 2014, suggesting more efficient use of its land bank, which is at a low cost. A final dividend will likely be announced at a later date. — RHB Research Institute, March 1
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