Tambun Indah capitalising on Pearl City brand

by **hlk** Fri 15 Nov 2013, 12:46

Business & Markets 2013
Written by BIMB Securities Research
Friday, 15 November 2013 10:23
A + A - Reset
Tambun Indah Land Bhd
(Nov 14, RM1.41)
Maintain buy at RM1.37 with a target price of RM1.70: Tambun Indah has
acquired a piece of freehold land in Daerah Seberang Prai Selatan, Penang
(measuring approximately 24.1 acres [9.75ha]) for a total consideration of
RM14.7 million (RM14 per sq ft [psf]).
The land will be developed as part of the existing township with an estimated
gross development value (GDV) of around RM120 million, and is expected to
be developed over a period of seven years.
The land is located adjacent to the existing Pearl City which will expand the
township geographically, which already has a ready catchment and can
capitalise on the existing branding of Pearl City as well as the infrastructure
from its existing projects.
It plans to develop gated strata residences with an expected GDV of RM120
million to be developed over seven years.
We expect good take-up rates for this land deal due to: (i) the catchment within
a matured area with ready amenities; (ii) appealing to the younger population
and the islanders who wish to upgrade to bigger homes; and (iii) convenience
of accessibility via the second link.
It is expected to launch the project at the earliest by 2014 with an average
selling price of around RM420,000 per unit, which is comparable to projects in
the surrounding area that are selling at around RM400,000 per unit for a
terraced house (20ft x 70ft). We also think the land price of RM14 psf is low
compared with the current market price in the surrounding area of RM20 to
RM30 psf. Moreover, the land cost is just 12% of its GDV, which is still below the average land cost of 20% of GDV. This new acquisition
will add a GDV of RM120 million to its current remaining GDV of RM2.1 billion.
The acquisition will be funded internally which will increase its gearing level from a net cash position to a net gearing of 0.02 times. —
BIMB Securities Research, Nov 14