16 July 2014

Tambun Indah Land fair value at RM3

  16 July 2014

RHB Research maintains its “buy” rating on Tambun Indah Land Bhd, with a fair value of RM3, following its recent land acquisition near Pearl City township.

“Tambun signed an agreement to buy 84ha, adjacent to Pearl City, which is the company’s main growth engine. We continue to see the potential for revalued net asset valuation and gross development value expansion as new land parcels in Batu Kawan are already transacted at higher prices and pricing for properties to be launched by new players is likely to set a new benchmark,” the research house said.

“Tambun signed a conditional sales and purchase agreement with TPPT Sdn Bhd for the proposed acquisition of 84ha of freehold land adjacent to the southern side of Tambun’s flagship Pearl City township, for a total purchase consideration of RM150 million. To recall, the company received the letter of acceptance of offer on June 4, and now the land deal is officially sealed.

“The acquisition will be funded via RM100 million debt and RM50 million internal funds. Given Tambun’s net gearing of only three per cent based on its latest balance sheet, the debt financing is estimated to increase the ratio to about 30 per cent by fourth quarter.

“The gearing level is in line with the industry average and manageable for Tambun considering its consistent cash flow coming from the township project,” said RHB.



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