Thursday, October 11, 2012

Tambun Indah - The 2nd Penang Bridge To Narrow Property Price Gap

Visit Note
  • Given the upcoming completion of the 2nd Penang Bridge in Sept 2013 and the establishment of industrial parks, Tambun Indah (TI) has 660 acres of land on the mainland to tap on the strong growth potential. TI’s key project is Pearl City located at Seberang Perai South.
  • Ahead of the completion of the 2nd Bridge, demand for properties on the mainland is already gaining momentum. TI’s sales of RM347m in 2011 were more than double from RM137m in 2010. We expect TI’s sales to hit RM400m this year. Sales in 1H already reached RM212m.
  • TI’s dividend stands out, anchored by solid balance sheet and earnings growth. On the back of our estimated earnings growth of 66%, 25% and 23% for FY12-14, based on the company’s dividend payout policy of 40-60%, our DPS forecasts translate into a fairly attractive net dividend yield of 11%, possibly the highest in the sector. TI paid 3.8sen in FY11.
  • There is no research house covering TI currently, which probably explains the company’s relatively undemanding PER valuations of about 4x. TI’s growth and dividend angle have been substantially under-appreciated by the market. We value the stock at RM0.95 at 40% discount to RNAV.
Source: RHB Research - 11 Oct 2012

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