AmInvestment initiates Titijaya Land with ‘buy’ rating

KUALA LUMPUR: AmInvestment Bank Bhd (AmInvestment Bank) has initiated Titijaya Land Bhd (Titijaya) with a ‘buy’ recommendation and a fair value of RM2.01, based on a 30 per cent discount to the group’s revised net asset valuation (RNAV).

Founded in 1997, the property group began initially developing small residential lots and low-cost apartments in Klang.

Over the years, the group embarked on more ambitious projects such as the E-Tiara Serviced Apartments, First Subang, and Subang Parkhomes, its first low-rise and low-density condominiums.

After gaining enough traction, the group then made a strong debut with its initial public offering (IPO) on Bursa Malaysia four years ago at RM1.80 per share, which was 30 sen above its offer price of RM1.50.

According to previous reports, the group raised RM122.55 million of the IPO and of that amount, RM30 million was allocated to acquire more land, RM49.5 million for working capital and the remainder for the repayment of bank borrowings and advances.

Since then, the group’s revenue growth has been strong, experiencing a FY13-16 3-year compound annual growth rate of 29.0 per cent, said AmInvestment Bank.

“Its earnings growth has also been commendable, with its FY13-16 3-year net profit cumulative annual growth rate (CAGR) standing at 7.1 per cent, despite its net profit margin dropping to 17.1 per cent in FY16 compared to 23.8 per cent in FY15, which we believe was due to the challenging industry environment,” guided the bank.

Looking forward however, the bank expects Titijaya’s earnings to return to positive growth from FY18 onwards, supported by the upcoming RM1.82 billion gross development value worth of projects planned to launch in FY18, and improving market conditions.