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Monday, August 6, 2012

Kenanga Research positive on IJM Land UK venture

KUALA LUMPUR: Kenanga Investment Research is positive on IJM Land Bhd's venture into the UK with a joint venture to build a five-star hotel, residential apartment, which will have a gross development value (GDV) of £280mil (RM1.4bil).

IJM Land had on Friday entered into a shareholders' agreement with Lite Bell Consolidated Sdn Bhd to form a joint venture company in Jersey -- Mintle Ltd -- to acquire a 999-year lease over a 2.7-acre site.

The working capital to be funded by the company to develop the property would be between £25mil and £30mil.

"We are positive on the venture as the group is now seeking new earnings growth avenues in overseas given its already high earnings base in Malaysia," it said.

Kenanga Research said the project would see mid- to high-end apartments with a guided average selling price of £1,000-£1,100 psf. It reckoned the guided GDV was still extremely conservative. It added land cost was fair, based on the gross margin guidance of 25%. "There are no issues with the financing of the project by IJM Land. We expect the group's net gearing to inch up to 0.1 times from a 4Q12 net cash position of 0.1 times, assuming a 70:30 debt-equity financing of the land and a £30m working capital," said the research house.

By The Star

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