Hot Stock Titijaya gains 6.8% after positive AmResearch initiation note

by **Cals** Wed 02 Jul 2014, 23:10

Hot Stock Titijaya gains 6.8% after positive AmResearch initiation note

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Wednesday, 02 July 2014 11:02

KUALA LUMPUR (July 2): Titijaya Land Bhd rose as much as 6.8% in mid-morning trades, after AmResearch Sdn Bhd initiated coverage on the stock with a “buy” call and a fair value of RM3.30.

At 10.30 am, Titijaya was traded at RM2.62, up 13 sen or 5.2% with some 735,300 shares done.

The stock was the third top gainer on the exchange, rising as much as 17 sen or 6.8% to a high of RM2.66.

In a note today, AmResearch recognised under-researched Titijaya's experience in sourcing value-accretive land deals in mature residential neighbourhoods.

The research house expects the company to deliver net profit of RM95 million and RM123 million in FY15 and FY16 respectively, compared with an estimated RM68 million net profit in FY14.

“Hence, from the earnings standpoint, Titijaya is trading at an attractive FY15F PE of only 9x when compared to its larger peers’ 15x. This is backed by its solid three-year forward earnings CAGR of 30%,” it said.

AmResearch noted that Titijaya is currently developing a mall in Shah Alam, with 1.3 million sq ft of net floor area, which will underpin the take-up rate of its residential pre sales.

“Based on our estimated selling price of RM1,000 psf, the mall is worth about RM1.3bil, which is more than its current market cap of RM847mil,” it said.

The research house said Titijaya's two land deals in Brickfields and Batu Maung since its listing in November 2013, would double Titijaya’s gross development value (GDV) to RM7 billion. The two projects are expected to be launched in FY16.

Meanwhile, AmResearch noted Titijaya’s healthy balance sheet, with its net gearing ratio of 0.1 times in FY14, giving ample room for any acquisition of landbanks or projects.

“At the same time, the group could be looking to pay out 20% of its profits as dividends. Maiden dividends are expected in 4QFY14,” AmResearch said.