Tambun Indah Land Bhd
(July 17, 90.5 sen)
Hold with an unchanged target price of 91 sen: Tambun Indah Land Bhd’s sales and margins are expected to pick up in the coming quarters on the zero-rating of the goods and services tax (GST) between June and August 2018 and better buying sentiment post-14th general election (GE14) as well as the ongoing marketing campaign.
Management is keeping its RM150 million sales target for 2018 for now and will continue focusing on clearing its unsold stocks (both under construction and completed) amounting to RM240 million. As at March 2018, the average take-up rate for Tambun Indah projects was 70% where the bulk of the unsold stocks were attributed to both Raintree Park 2 (71.7% sold) and Pearl Saujana Permai (22.3% sold). Sales for both projects have nevertheless started to pick up post-GE14 on better buying sentiment. Also, with zero GST between June and August, we expect second quarter of 2018 (2Q18) to 3Q18 margins to improve.
Given the challenging property market outlook and high levels of unsold stocks, Tambun Indah intends to only launch its new projects worth RM158 million in gross development value (GDV) by end 2018. These include: i) Palma Residency in Bukit Mertajam (RM48 million in GDV) which comprises 90 units of gated terraces priced from RM533,000 per unit; and ii) Palm Garden (RM110 million in GDV). The latter is a high-rise project which is located next to its GEMS International School, and which will be priced from RM200,000 per unit.
As at March 2018, Tambun Indah’s remaining land bank which stood at 389.2 acres (157.5ha) worth RM2.96 billion in GDV could last till 2023 (another five years). Tambun Indah Land has a dividend payout policy of 40% to 60%. — Maybank IB Research, July 16