AmResearch has accorded a fair value of RM1.75 per share to Ivory PROPERTIES [] Group Bhd (Ivory) which will be listed on Wednesday, July 28.
The research house described the company as an established developer with a strong track record in Penang.
“The initial public offer price is RM1.00/share. Our fair value stands at RM1.75/share pegged to a 35% discount to our estimated NAV of RM2.70/share,” it said in a recent report.
AmResearch said Ivory has strong localised knowledge and an impeccable execution track record, with quick turnaround times. It is at the forefront of urban renewal in Penang.
The redevelopment of the Escoy tin smelter into prolific Penang Times Square is a good case in point - it provides Ivory bargaining leverage to negotiate future redevelopments. Ivory will be accelerating presales from RM500mil in FY10F to RM750mil in FY11F.
“We are forecasting earnings of RM36mil in FY10F, rising by 51% to RM54mil in FY11F and a further 30% to RM70mil in FY12F - putting its 3-year earnings CAGR at a solid 63% off an earnings base of just RM17mil in FY09.
“Balance sheet is strong, with net gearing of 10% in FY11F. We see scope for transformational growth from large NAV-accretive land deals under negotiation. The IPO is attractively priced - at just 3.4x FY11F's earnings, and at a steep 63% discount to our NAV of RM2.70/share. It is also trading at deep discount to its small-cap peers - despite Ivory's stronger earnings growth,” it said.
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