IJM Land, Media Prima are JP Morgan top-picks

IJM Land, Media Prima are JP Morgan top-picks
Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Wednesday, 10 July 2013 10:14

KUALA LUMPUR: JP Morgan has included MEDIA PRIMA BHD [] and IJM Land Bhd in its Global SMid Radar list of top 32 investment ideas for the third quarter edition.

The list comprises companies from around the world with a market capitalisation of below US5$ billion (RM16 billion).

Media Prima and IJM Land are the only Malaysian companies on the list. They are also the only Southeast Asian companies recommended by JP Morgan.

In a July 3 report, JP Morgan analyst Simone Yeoh said property developer IJM Land has strong earnings growth and the stock is trading at a deep discount to its revised net asset value (RNAV).

"We forecast 30% earnings per share compound annual growth rate over the next two years, driven by new launches with focus on the landed and mid-market segments from below RM1 million to RM1.5 million per unit where demand remains strong, with rising margins with improved product mix and higher selling prices.

"The stock trades at a 37% discount to its RNAV of RM4.50 a share versus the historical mean discount of 16% to 27% for its closest peers and for the domestic sector," Yeoh noted.

She also said IJM Land benefits from its strong competitive position given its geographical landbank in key growth centres with a diverse product range.

"It is both a niche and township developer with PROPERTIES [] ranging from residential mass market to high-end, plus some commercial developments," Yeoh said.

IJM Land's total current landbank stands at 6,203 acres (2,510ha) with a projected gross development value of RM35 billion, with its landbank spreading across the country.

"IJM Land benefits from a good longer-term visibility with a landbank size sufficient to sustain earnings for at least the next eight to 10 years."

IJM Land is one of the 15 additions to JP Morgan's Global SMid Radar.

JP Morgan has a price target of RM3.70 for IJM Land. The counter closed unchanged at RM2.87 yesterday.

As for Media Prima, Yeoh commended the group for being in a dominant position across five media platforms.

It noted that Media Prima's free TV and print advertising expenditure (adex) growth for the first quarter of 2013 outpaced the industry, and is on track with JP Morgan's blended adex growth of 9% year-on-year for 2013 financial year ending December (FY13).

"Media Prima's dominant market position across television, print, radio, outdoor and online media in our view makes it an attractive proxy to rising consumption growth in Malaysia, with Malaysian advertising expenditure having risen every year since 1998," she said.

Media Prima's prospects, Yeoh added, come from stronger adex growth after the May 5 general election, as lingering concerns and uncertainties have dissipated by then.

She also said Media Prima has the potential to raise its dividend payout for FY14 and FY15 from the net dividend per share of 13 sen in FY12.

"Furthermore, the stock trades on a forecast FY14 price-earnings ratio of just 12.7 times versus the historical mean of 14.4 times, and versus 17.8 times for its Asian regional peers," she added.

Media Prima shares have lost more than 19% from its 13-year high of RM3.15 recorded on May 28. Yesterday, the stock lost one sen to close at RM2.64. JP Morgan has a target price of RM3.20 for the counter.



This article first appeared in The Edge Financial Daily, on July 10, 2013.