IJMLD’s 2QFY15  (Mar)  results  missed expectations.  Maintain BUY with a revised TP of MYR3.97  (19.6% upside). New sales hit MYR450m, same as  last  quarter’s,  and  projects  in  the  Klang  Valley  region  contributed 40-50% of 1H total sales of MYR900m. We expect sales to grow steadilyin  view of the healthy pipeline  launches. However, given the weaker 1H results, we cut our FY15-16 earnings forecasts by 10-11%.

Below  expectations.  IJM  Land’s  (IJMLD)  2QFY15  results  came  in below  our and  market  expectations.  The  weaker  earnings were  mainly due to slower progress billings during the period. Headline net profit was hit  by  MYR6.68m  unrealised  foreign  exchange  losses  associated  with GBP-denominated  borrowings  as  opposed  to  a  MYR13.9m  net  gain  in 2QFY14. 

MYR450m  sales  in 2QFY15.  New  property sales  hit  MYR450m,  same amount  as the previous quarter.  The hot-selling Rimbayu Phase 3 & 4, Pantai  Sentral  Park  block  1  and  other  ongoing  projects  were  the  key contributors.  In  the  pipeline,  IJMLD  plans  to  launch  another  block  in Pantai Sentral Park  and Phase 5 Rimbayu in the coming months. Both projects  are  estimated  to  have  a  combined  GDV  of  about  MYR450m.Meanwhile,  Sebana  Cove  is  expected  to  contribute  to  3QFY15  sales.Sales in Sebana Cove have been very encouraging, thanks to Petronas’ plan  to  turn  Pengerang  into  a  regional  oil  and  gas  hub.  Almost  all  50 units of villas that were launched in October were fully taken up, bringing in MYR50m sales.  Some zero-lot bungalows and linked houses will be rolled out next year. 

Forecasts.  Given  the  weaker  1H  results,  we  reduce  our  FY15-16 earnings  forecasts  by  10-11%.  Unbilled  sales  declined  to  about MYR1.2bn  (vs  MYR1.5bn  in  1QFY15).  Including  the  London  project, unbilled sales would amount to MYR1.8bn.

Maintain  BUY.  The  valuation  exercise  (as  part  of  the  ongoing privatisation  exercise)  has  been  submitted  for  approval.  Subsequently, the EGM to conduct a poll for the acceptance of the deal will likely be held in Jan 2015.  We maintain our BUY rating on the stock. However, given our revised TP for IJM Corp (IJM MK, BUY, TP: MYR7.50), our TP for IJMLD is hence adjusted to MYR3.97 (from MYR4.15), pegged to the valuations of the former (0.5 of MYR7.50 plus 22 sen cash).

Source: RHB