Tambun Indah IR - Shariah status Statistics 2.00 Yes...
Transcript of Tambun Indah IR - Shariah status Statistics 2.00 Yes...
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January 10, 2017
Real Est
ate
M
ala
ysi
a
THIS REPORT HAS BEEN PREPARED BY MAYBANK INVESTMENT BANK BERHAD
SEE PAGE 25 FOR IMPORTANT DISCLOSURES AND ANALYST CERTIFICATIONS
PP16832/01/2013 (031128)
Wong Wei Sum, CFA [email protected] (603) 2297 8679
Tambun Indah Land (TILB MK)
Riding the Second Wave
Initiate with a HOLD, MYR1.53 TP
Tambun Indah (TI), a property developer with a sizeable landbank in
Simpang Ampat on Penang mainland, is a proxy to the real estate boom
in the neighbouring Batu Kawan (BK), as it benefits from greater housing
demand following the completion of flagship projects in 2016-2019. We
initiate coverage with a HOLD and MYR1.53 RNAV-TP (on 0.5x P/RNAV). TI
is a defensive offering with attractive yields of 5.3% (2017).
Catching the second wave of growth in Batu Kawan
The completed / soon-to-be completed flagship projects — Design Village
Penang (end-Nov 2016) and IKEA Penang store (end-2018) — are expected
to bring in the second wave of growth in BK. These flagship projects are
expected to create job opportunities and serve as a population
catchment, boosting housing demand in BK. As one of the largest land
owners with 381 acres of remaining landbank in Simpang Ampat (a 15 min
drive from BK), TI is a proxy to the real estate boom in BK.
Right products at right pricing, clean balance sheet
Most of TI’s properties are priced below MYR500,000/unit (current
demand trend) thanks to its relatively low land cost which provides it
more product and pricing flexibility. This strategy has been successful, as
seen in its high average take-up rate of 82%. As at Sep 2016, TI has
MYR9.7m net cash (2.3sen/sh), giving it room to gear up to grow its
landbank. Our 3-year net profit forecasts are premised on sales
assumptions of MYR281m/MYR273m in FY16/17. Unbilled sales were
MYR259.7m as at Sep 2016 (0.8x our FY17F revenue).
A defensive offering; MYR1.53 TP
Currently, we value developers under our coverage at 0.4-0.7x P/RNAV.
Given its relatively small market capitalisation, we value TI at 0.5x
P/RNAV (MYR3.05 RNAV est.; +0.1x above Glomac’s historical P/RNAV
average). The premium valuation is justified by TI’s superior margins and
clean balance sheet. TI’s share price may however be affected by its
lacklustre sales outlook in the short term. Initiate coverage with HOLD.
Company Description
Statistics
Shariah status
52w high/low (MYR)
3m avg turnover (USDm)
Free float (%)
Issued shares (m)
Market capitalisation
Major shareholders:
39.3%
8.4%
5.4%
427
0.0
Tambun Indah Land Bhd is principally involved in
property development business. All of its landbank is
located in Penang.
Yes
TEH KIAK SENG
TSAI YUNG CHUAN FAMILY
Kumpulan Wang Persaraan
1.55/1.26
39.1
MYR598.3M
USD134M
Price Performance
70
75
80
85
90
95
100
105
110
115
1.10
1.20
1.30
1.40
1.50
1.60
1.70
1.80
1.90
2.00
Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16
Tambun Indah - (LHS, MYR)
Tambun Indah / Kuala Lumpur Composite Index - (RHS, %)
-1M -3M -12M
Absolute (%) 2 (6) 1
Relative to index (%) 1 (6) 1
Source: FactSet
FYE Dec (MYR m) FY14A FY15A FY16E FY17E FY18E
Revenue 467 368 409 329 240
EBITDA 139 129 133 105 68
Core net profit 102 94 101 80 53
Core FDEPS (sen) 24.3 22.3 23.3 18.6 12.3
Core FDEPS growth(%) 47.3 (8.3) 4.7 (20.0) (34.2)
Net DPS (sen) 9.7 9.0 9.4 7.5 4.9
Core FD P/E (x) 5.8 6.3 6.0 7.5 11.4
P/BV (x) 1.5 1.3 1.2 1.1 1.0
Net dividend yield (%) 6.9 6.4 6.7 5.3 3.5
ROAA (%) 17.6 13.2 12.4 9.4 6.1
EV/EBITDA (x) 5.2 4.7 4.1 4.9 7.5
Net gearing (%) (incl perps) 9.4 1.9 net cash net cash net cash
Consensus net profit - - 96 78 97
MKE vs. Consensus (%) - - 4.8 3.1 (45.4)
Share Price MYR 1.38 12m Price Target MYR1.53
HOLD
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January 10, 2017 2
Tambun Indah Land
Value Proposition
A proxy to the booming Batu Kawan area.
It has a total remaining landbank of 406 acres in mainland
Penang. Of this, 94% is located in Simpang Ampat (a 15
min drive from Batu Kawan area and Penang Second
Bridge).
Focus is on affordable housing (<MYR500k/unit) which is
the current demand trend. Right products at right pricing
have resulted in a high average take up rate of 82%.
Above industry average profit margin provides pricing and
product flexibility which allows the company to weather
the current slowdown in the domestic property market.
GDV breakdown by location
Source: Company
Price Drivers
Historical share price trend
Source: Company, Maybank Kim Eng
1. Phase 1 of Batu Kawan park’s infrastructure was
completed in 2012.
2. Batu Kawan gained traction with foreign investments
such as Bose Corp, VAT since 2012.
3. The completion and official opening of Penang second
bridge in Mar 2014. TI benefited from the spill over
effects from the Penang second bridge and registered
record property sales of MYR496m in 2013.
4. 2015 sales (-39% YoY) were hit by the delays in obtaining
advertising permit and developer license.
5. 9M16 actual sales (+9% YoY) met 70% of its full year sales
expectation of MYR300m for 2016.
Financial Metrics
Our net profit forecasts are driven by property sales
assumptions of MYR281m/MYR273m for 2016/2017.
Pretax margin is expected to stay around 30% (above
industry average) in 2016-2018. Clean balance sheet with
net cash of 2.3sen as at Sep 2016.
A good dividend paymaster. TI has a dividend payout policy
of 40-60% of net profit excluding revaluation gains/losses.
It has been paying more than 40% of net profit as
dividends since 2010.
Sales trend between 2012-2016F (management target)
Source: Company
Swing Factors
Upside
Potential RNAV-accretive land acquisitions in Penang
mainland.
Stronger-than-expected take-up rates for its ongoing and
new projects.
Downside
A prolonged slowdown in the property sector.
Weaker-than-expected operating margins on higher
marketing expenses and raw material prices.
Delay in property launches due to the delay in getting
housing approvals such as Advertising Permit and
Developer Licence (APDL).
Simpang Ampat
92%
Others8%
50
150
250
350
450
550
0.50
1.00
1.50
2.00
2.50
3.00
Dec-11 Dec-12 Dec-13 Dec-14 Dec-15
Tambun Indah - (LHS, MYR)
Tambun Indah / MSCI AC Asia ex JP - (RHS, %)
401
496
429
263300
0
100
200
300
400
500
600
2012 2013 2014 2015 2016F
MYRm
1
1
2
3 4 5
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January 10, 2017 3
Tambun Indah Land
Contents
Merit 1: Riding the second wave of growth in Batu Kawan 4-8
Merit 2: Right product, right pricing 9-12
Merit 3: Clean balance sheet provides financial flexibility 13
Risks 14
Financials 15-18
Valuation 19-20
Our RNAV estimate 21
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Tambun Indah Land
Merit #1: Riding the second wave of growth in Batu
Kawan
Rising land prices in Batu Kawan
In our view, Batu Kawan (BK) is poised for a second wave of growth. The first wave was in 2013-
2014 when accessibility and connectivity to BK improved tremendously after the official opening
of the Sultan Abdul Halim Muadzam Shah Bridge (Penang second bridge). The Penang second
bridge, which connects Batu Maung on Penang island to Batu Kawan on the mainland, has helped
to accelerate the development of BK and transform it into a residential/commercial/industrial
area, from pure agricultural land previously. The tremendous change is reflected in the land
price, which rose at a CAGR 24% from 1992 to 2016 (source: I&T Properties, companies’
announcements; also see our sector report on Batu Kawan).
Penang second bridge which links Batu Maung (island) to Batu Kawan (mainland)
Source: Google
Batu Maung
Batu Kawan
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January 10, 2017 5
Tambun Indah Land
Land transactions in Batu Kawan – land price has risen at 24% CAGR from 1992 to 2016
Year Transacted price (MYR
psf)
Remarks
1992 0.34 Compulsory acquisition of 5,260 acres by the Penang State Government at
MYR15,000 per acre
2002 3.52 Land purchase of 750 acres by Abad Naluri S/B from Penang Development Corp
(PDC)
2009/2010 8-10 Land acquisition process began on private lands in the Batu Kawan locality
affected by the Second Penang Bridge alignment and road linkages to North
South Highway and were awarded compensation at a rate of MYR8-10psf.
2011 30 Announcement of an industrial park catering for SME with 150 acres to be
established at the Batu Kawan Industrial Park and 67 acres for SMEs opened for
sale as backbone for solar and renewable energy industries.
2012 15.3 The purchase of 87 acres of industrial land by Robert Bosch at MYR58m
2013 37.9 39.5 acres of land deal between PDC and developer PE Land S/B for the
construction of a premium retail outlet, hotel, cafes and F&B outlets
2013 35.0 The purchase of 76.5 acres of land in Simpang Ampat by Eco World for
MYR116m.
2014 45.3 The sale of 245 acres of land for the purpose of development of an integrated
shopping mall, anchored by an IKEA store and mixed development of offices
and residences jointly developed by Aspen-Ikano.
2014 40.5 - 55 Paramount bought about 44 acres of land in Batu Kawan.
2016 44 – 56 Eco World has proposed to buy 374.6 acres of leasehold land in Batu Kawan
Source: I&T Property, media reports, companies announcements
Completion of flagship projects to boost property demand
We expect the second wave of growth in BK to materialize with the completion of a few growth
catalyst projects including IKEA Penang store, Design Village Penang, KDU Penang University
College and Columbia Asia Hospital.
The upcoming IKEA Penang store (1.2m sq.ft.; 100%-owned by Ikano; located at the Aspen Vision
City project [MYR8b-10b GDV], 80% owned by Aspen Group [unlisted] and 20% by Ikano Pte Ltd) is
slated for opening by late 2018 while Design Village Penang (a 400,000 sq.ft. mall which is owned
by unlisted PE Land Sdn Bhd) had already conducted a soft opening end-Nov 2016, we understand.
Elsewhere, Columbia Asia Sdn Bhd is investing MYR185m on its new hospital with 150 beds in Batu
Kawan. As for KDU Penang University College (10.5-acre flagship campus) by Paramount Corp (PAR
MK; Not Rated), the college will be ready by 2Q19. We understand the campus can accommodate
up to 5,000 students. These commercial activities, including support industries such as hotels and
restaurants in BK, will serve as an immediate population catchment and consequently boost
demand for properties (residential and commercial) in BK, we believe.
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January 10, 2017 6
Tambun Indah Land
Rising commercial activity in Batu Kawan from 2017 onwards
Source: Penang property website
Penang island – Batu Kawan akin to Hong Kong – Shenzhen?
In our view, Penang island - Batu Kawan (mainland) is a tad similar to the Hong Kong – Shenzhen
situation with a huge disparity in property prices. Unlike the relationship between Iskandar
Malaysia (which is in Malaysia) and Singapore, Batu Kawan and Penang island are governed by the
same authority, thus allowing for better synchronization of development plans.
Given the high density and land prices on Penang island, BK can well serve a spillover
manufacturing and residential hub to the island. To illustrate the disparity in property values,
current asking prices for a mid-end apartment on the island range between MYR650-800psf (with a
few high-end condominiums hitting MYR1,300-1,500psf [net]), vs MYR330-400psf in the Simpang
Ampat - Batu Kawan area (Simpang Ampat is a 15 minute drive from Batu Kawan).
Similar to the initial years of Shenzhen and Iskandar Malaysia, BK has yet to reach its critical mass
at the moment due to the lack of commercial activity. But it is just a matter of time before this
happens. BK should breakthrough and gain more traction with the completion of the above-
mentioned flagship projects in 2016-2019 and property prices over there should play catch-up
over time, we believe.
How high can property prices go?
According to NAPIC statistics, Iskandar Malaysia’s House Price Index (HPI) surged 45% between
2011 and 2013 (before the entry of Chinese developers at end-2013 and the slowdown in property
market in 2014) after the completion of a few catalytic projects such as Legoland Malaysia Theme
Park, Johor Premium outlet, Newcastle Medical University Malaysia and Puteri Harbour Waterfront
Development.
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January 10, 2017 7
Tambun Indah Land
According to Samuel Tan, the director of KGV International Property Consultants S/B, the selling
price for an intermediate double-storey link house in Iskandar Malaysia had jumped to about
MYR500,000/unit (+>2x) in 2013, from MYR200,000/unit in 2011 while pricing for a new bungalow
had surged to MYR3m-5m/unit (+>2x) in 2013, from MYR1m/unit.
In our view, BK stands a good chance of seeing a similar price uptrend, though the magnitude of
such the increase is not known yet. According to PA International’s data, the average price
growth of existing housing in Batu Kawan from 2013 to 2015 ranged from 10%-20%. This is despite
the slowdown in the domestic property market and before the completion of the aforementioned
catalytic projects which have already completed or should be completed by 2018-2019.
Johor House Price Index (HPI) surged +45% between 2011 and 2013 after the completion of a few catalytic projects in Iskandar Malaysia
Source: Maybank Kim Eng, CEIC, NAPIC
Penang: HPI grew +1.2% QoQ, +3.4% YoY in 3Q16
Source: Maybank Kim Eng, CEIC, NAPIC
Entry of big players is a testament to BK’s long-term prospects
The entry of key property players in Batu Kawan is a testament to Batu Kawan’s long-term
prospects. Paramount acquired 44 acres of freehold land in Batu Kawan in 2014 for MYR40.50 psf
(for a future KDU College Penang) and MYR55psf (for its mixed development project comprising
apartments and retail spaces there). Elsewhere, Eco World acquired 76 acres (MYR35psf) of land
at Simpang Ampat in 2014 for its Eco Meadows project. It has further strengthened its foothold in
BK by acquiring 374.6 acres of leasehold land for MYR44-56 psf in Jun 2016. As one of the largest
land owners with 381 acres of remaining landbank (to be developed in 2017-2022) in Simpang
Ampat (15 min drive from BK), TI is the proxy for the real estate boom in BK.
Developers around the Batu Kawan and Simpang Ampat area
Developers GDV
(MYRm) Remarks
1) Tambun Indah* (TILB MK) 2,828 Integrated township development
2) Eco World Development (ECW MK) 8,680 Landed properties, shop lots, high-rise
3) Paramount Corp (PAR MK) 1,800 High-rise, shop lots, college
4) Aspen Group (unlisted) 8,000 Mixed development with office, shop lots,
landed and high-rise properties
5) PE Land (unlisted) 1,000 Hotel, premium outlet, apartments
*Pearl City project only (remaining GDV)
Source: Companies, media reports
80
110
140
170
200
230
260
290
Malaysia Penang Johor
HPI 2000 = 100
0
50
100
150
200
250
300
350
Mar-
08
Sep-0
8
Mar-
09
Sep-0
9
Mar-
10
Sep-1
0
Mar-
11
Sep-1
1
Mar-
12
Sep-1
2
Mar-
13
Sep-1
3
Mar-
14
Sep-1
4
Mar-
15
Sep-1
5
Mar-
16
Sep-1
6
Penang Terraces High-rise Detached Semi-detached
HPI 2000 = 100
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January 10, 2017 8
Tambun Indah Land
Tambun Indah is a proxy to the real estate boom in Batu Kawan
Source: Star
Batu
Kawan
Tambun Indah’s project – Pearl
City
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January 10, 2017 9
Tambun Indah Land
Merit #2: Right products, right pricing
Low land cost provides product and pricing flexibility
TI is the only listed developer with pure exposure to the mainland of Penang. Its flagship project
Pearl City, occupies 381 acres of remaining landbank at Simpang Ampat (about 15 min drive from
Batu Kawan and Penang Second Bridge; contributed 71% of TI’s revenue in 9M16) and has an
estimated GDV of MYR2.8b (92% of TI’s total remaining GDV). The landbank, which TI has been
accumulating since 2008, carries an average land cost of c.MYR13psf, which is relatively lower
than other developers’ MYR38-51psf average land cost around the BK area. The cheap land cost
allows TI to be more flexible in terms of pricing and product launches, while allowing it to be
more competitive in times of uncertainty.
Average land cost psf for developers in Simpang Ampat - Batu Kawan
Developers Land cost
(MYR psf)
GDV
(MYRm)
% of land cost/total
GDV
1) Tambun Indah (TILB MK)* 13.2 2,828 6.9%
2) Eco World Development (ECW MK) 50.5 8,680 11.4%
3) Paramount Corp (PAR MK) 50.8 1,800 5.4%
4) Aspen Group (unlisted) 45.3 8,000 6.0%
5) PE Land (unlisted) 38.0 1,000 6.5%
*Pearl City project Source: Companies, media
Location of TI’s project on the mainland of Penang
Source: Company
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January 10, 2017 10
Tambun Indah Land
Products cater to the current demand trend
80-90% of TI’s remaining GDV is derived from landed properties, the bread and butter products
that provide relatively steady sales compared to commercial or high-rise properties. On top of
choosing the right products, the majority of TI’s properties are affordable landed housing priced
below MYR500,000/unit to meet the current demand trend. This strategy has been successful, as
seen in its commendable average take-up rate of 82% for the launched projects as shown as
below.
Most projects are >55% sold except for Pearl Tropika (a non-gated landed property project). The
low take-up rate could be due to its relatively high price tag of MYR600,000/unit for semi-Ds (as
compared to terrace’s MYR450k/unit). These semi-D units account for 43% of Pearl Tropika’s total
units.
As at Sep 2016, Tambun Indah's projects' average take-up rate was 82%
Projects Take-up rate
(%) * Remarks
Pearl Tropika Palmington 37.1
A non-gated landed property project launched
in 1Q 2016; Double storey house starts from
MYR450k/unit; semi-Ds start from
MYR600k/unit
Avenue Garden – Palmington 59.4
Rain Tree Park 2 - Palmington 55.4
Pearl Avenue 2 - Palmington 73.3
Rain Tree Park 1 - Palmington 83.4
Pearl Harmoni - Palmington 97.3
Pearl Impian - Palmington 99.5
BM Residence (condomonium) 98.0
Permai Residence 94.6
Straits Garden - Premcourt 93.0
Camelia Park (condominium) 97.0
Residensi Bukit Kecil 92.2
Source: Company
Superior margins beat most large-cap peers
TI has the highest operating margin among listed developers under our coverage thanks to its
relatively low land cost and prudent cost management. We also attribute the superior profit
performance to its founder and Managing Director, Ir. Teh Kiak Seng, who has vast experience and
in-depth knowledge in the field of construction and engineering.
EBIT margins for listed developers under our coverage
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
2012 2013 2014 2015
ECW Mah Sing Sunway* Glomac UEMS SP Setia Tambun
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January 10, 2017 11
Tambun Indah Land
*Sunway property development business only Source: Companies, Maybank KE (chart)
Investment properties to enhance future property values
TI has added two properties to its investment portfolio, namely GEMS International School (100%-
owned) and Pearl City Mall (50%-owned; a JV project with Ripro Sdn Bhd, which owns C-MART
hypermarkets in Kedah) at its Pearl City project.
These properties, which were completed in Sep 2015 and Apr 2016 respectively, have, in our view,
served to enhance the marketability and future value of properties at the Pearl City project.
The GEMS International School, which has an area of 200,000 sq.ft., has a total student capacity
of 1,500 while Pearl City Mall, which has a built-up area of c.300,000 sq. ft., is currently >70%
occupied.
Apart from enhancing the attractiveness of the Pearl City project, the two investment properties
will also provide steady annual rental income of about MYR4.9m to TI’s bottom line (about 3%/4%
to 2016F/2017F pretax profit; Pearl City Mall’s base rent will be re-negotiated every three years
while GEMS International School’s base rent is fixed for eight years and +2% thereafter). TI intends
to further develop and promote Pearl City Business Park (where Pearl City Mall is located) to
enhance its recurring income stream, we understand.
GEMS International School Pearl City Mall with C-Mart Premium Hypermarket as
anchor tenant
Source: Maybank KE Source: Maybank KE
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January 10, 2017 12
Tambun Indah Land
Master plan of Pearl City project. The project accounts for 92% of Tambun Indah’s total remaining GDV
Source: Company
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January 10, 2017 13
Tambun Indah Land
Merit #3: Clean balance sheet provides financial
flexibility
Net cash position; ample room to grow landbank
There is room for landbanking. TI has a net cash of MYR9.7m or 2.3sen/sh as at Sep 2016 versus
the industry average of 40% net gearing (for developers under our coverage). The conservative
and clean capital structure will provide financial flexibility to TI and allow it to take on additional
debt of up to MYR265m (assuming net gearing of 50%) without the need to raise funds in the
equity market for future acquisition, we estimate. Management’s focus will continue to be on
Penang mainland but it does not discount the possibility of expanding beyond the state border.
As it stands, there is no further information on its future plans. Nevertheless, our back-of-the-
envelope calculation shows that our RNAV estimate could be enhanced by +15 sen/sh for every
MYR500m GDV worth of additional projects assuming: a) 100% stake in the projects; b) 25% pretax
margin, c) a 4-year development period.
Net gearing for developers under our coverage
Based on latest quarterly results
Source: Companies, Maybank KE (chart)
A good dividend paymaster
TI’s strong balance sheet allows it to be a good dividend paymaster. It has a consistent history of
paying out dividends at a sustainable level of >40% of its net profit (excluding revaluation gain or
loss on investment properties) since 2010. Despite the current slowdown in the property market,
TI is keeping its dividend policy of 40-60% of net profit (excluding revaluation gain or loss on
investment properties).
-0.1
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
Eco World UEMS SP Setia Sunway Mah Sing Glomac TambunIndah
(x)
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January 10, 2017 14
Tambun Indah Land
Risks and concerns
Single location risk
All of TI’s remaining landbank of 406 acres (94% located in Simpang Ampat) is located in the
mainland of Penang (the balance 6% located in Bukit Mertajam and Butterworth). While
management is also looking to expand its landbank outside of Penang, short-term focus will be on
the Penang mainland.
Depleting landbank
According to the management, its remaining landbank of 406 acres will be fully developed by
2022 (five years from now). If management fails to acquire new landbank before 2022, TI’s
earnings may significantly decline and this could affect the group’s longer term prospects.
Rising competition
We see rising competition in the BK-Simpang Ampat area with the entry of a few Klang Valley-
based developers. There is no direct competition between TI and the newcomers or the Pearl City
project at Simpang Ampat and projects at BK, we believe, as TI’s Pearl City project is a full-
fledged integrated township (mostly landed properties) on its own, which focuses more on
affordable housing while high-end and/or high-rise integrated or commercial developments seem
to be the choice of the developers at BK, probably due to their relatively higher land costs.
Elsewhere, we also see intense competition in landbanking. The entry of a few Klang Valley-based
developers as well as future commercial developments raises awareness of BK’s potential and its
surrounding area. It may not be easy for TI to expand its landbank around the area at attractive
pricing, hence, its high operating margin of about 30% may not sustain over the longer term.
Property sector remains slow
Property demand continues to moderate. The country’s property sales in 3Q16 continued to trend
down: -6.6% QoQ and -12% YoY. This downtrend was apparent in the major states where
Selangor’s sales contracted -10.5% QoQ, -10.7% YoY; KL -3.4% QoQ, -19.1% YoY; in Johor -17.2%
QoQ, -19.5% YoY and Penang -6.4% QoQ, -5.4% YoY. Apart from weak consumer sentiment, the
slowdown may also be attributed in part to the buyers’ inability in securing mortgages due to
their weakened credit quality. Developers continue to focus on affordable housing and landed
properties and have delayed the launch of their high-end/luxury projects.
TI’s sales have also been affected by the current slowdown in the domestic property market. To
encourage sales, TI intends to downsize its property units to make them more affordable in
absolute pricing.
TI’s quarterly property sales since 2015 Source: Company
0
20
40
60
80
100
120
140
160
1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
MYRm
Lack of new launches due to the delays in obtaining advertising permit and developer license.
Due to weak buying sentiment and the lack of new launches.
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January 10, 2017 15
Tambun Indah Land
Financials
Property sales supported mainly by Pearl City project
Our forecasts are based on TI’s existing portfolio of property assets without taking into account
potential future acquisitions. Based on our take-up assumptions for the individual projects, we
derive property sales assumptions of MYR281m (in 2016) and MYR273m (in 2017) - mainly
supported by its Pearl City project. In 9M16, TI has locked in MYR211.4m (+9% YoY; 2015 total
sales: MYR263m) in property sales, meeting 70% of its MYR300m sales target for 2016. Unbilled
sales stood at MYR259.7m at end-Sep 2016 (0.8x of our FY17F property revenue).
Maybank KE 2016-2017 sales forecasts
Township Ongoing projects
Sales forecasts
2016 2017
1) BM Residence 0.8 0.7
0.0 0.0
2) Straits Garden 6.6 12.3
3) Pearl Residence 0.6 0.0
4) Pearl Impian 0.5 0.0
5) Pearl Avenue 1 4.9 0.0
6) Camellia Park 3.8 0.9
7) Permai Residence 3.6 1.3
8) Pearl Harmoni 2.5 3.0
9) Bukit Residence 8.2 3.6
10) Pearl Avenue 2 2.7 4.0
11) Raintree Park 1 14.1 17.0
12) Raintree Park 2 99.9 66.5
13) Capri Park 0.0 0.4
14) Pearl Indah 1 0.0 1.0
15) Pearl Square 1 3.5 1.0
16) Pearl Square 2 0.0 0.6
17) Avenue Garden 62.7 24.1
18) Pearl Tropika 67.0 37.2
19) Pearl Saujana 1 0.0 30.8
20) Pearl 28 0.0 6.0
21) Pearl Saujana 2 0.0 0.0
22) Central Avenue @ PC 0.0 0.0
23) Cemellia Park 0.0 0.0
24) Alma 0.0 14.4
25) Kota Permai 0.0 0.0
26) Palm Garden @ PC 0.0 0.0
27) Pearl City (2017-2022)
0.0 48.6
Total 281.2 273.4
Source: Maybank KE
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January 10, 2017 16
Tambun Indah Land
Earnings likely to be flat but margins should stay high
We expect TI’s net earnings growth to be around +7% in 2016 but decline by -20% in 2017 and -34%
in 2018 dragged by the current slowdown in property demand. Property sales were down -13% YoY
in 2014 and -39% in 2015 on the lack of new launches owing to the delays in obtaining advertising
permit and developer license (APDL). We expect the property demand to only pick up in
4Q17/2018.
Positively, we expect pretax margins to remain relatively stable at 29-33% between 2016-2018
thanks to TI’s prudent cost management and its relatively low land cost. Elsewhere, we expect TI
to remain in a net cash position between 2016-2018. Note that we have not factored in any
potential land acquisition in our earnings forecasts yet.
Pertinent to note that earnings decline over the next two years is not unique to TI but across
property developers with projects in Malaysia due to slower sales in the last two years. It is only
those with lumpy accounting earnings recognition from overseas projects that will see earnings
growth. The angle on TI is its strategic landbank, affordable product offering and strong balance
sheet.
TI’s actual property sales between 2012-2015 and 2016 management sales target
Source: Company
401
496
429
263300
0
100
200
300
400
500
600
2012 2013 2014 2015 2016F
MYRm
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January 10, 2017 17
Tambun Indah Land
Stable dividend payout
TI has a consistent history of paying out dividends at a sustainable level of >40% of its net profit
since 2010. It has a 40-60% dividend payout policy excluding revaluation gain or loss on investment
properties.
Our 2016/2017/2018 net DPS forecasts of 9.4sen/7.5sen/4.9sen are based on a dividend payout of
40% of net profit. This translates into 6.7%/5.3%/3.5% net yield based on the current pricing. TI
has declared an interim dividend of 3 sen for 2016 (to be paid on 16 Feb 2017).
Dividend payout and dividend per share (sen) since 2010
Source: Company
4.6 3.8 5.3 6.69.7 9.0
40.3
50.3
42.441.3
40.1 40.6
0
10
20
30
40
50
60
2010 2011 2012 2013 2014 2015
Dividend per share (sen) Dividend payout ratio (%)
(%)
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January 10, 2017 18
Tambun Indah Land
Financial statement (MYR m)
FYE Dec
P&L 2014A 2015A 2016F 2017F 2018F
Revenue 466.8 367.7 408.7 329.0 239.7
- Property development 0.0 0.0 405.3 325.6 236.3
- Investment prop 0.0 0.0 3.5 3.5 3.5
Cost of sales (306.3) (214.4) (229.6) (185.0) (140.6)
Gross profit 160.6 153.2 179.1 144.0 99.1
Operating Profit (EBIT) 160.6 153.2 179.1 144.0 99.1
Other income 3.0 0.8 0.0 0.0 0.0
Sales and marketing expenses (24.1) (25.0) (46.5) (39.0) (31.4)
Interest (Exp)/Inc (2.5) (1.8) (1.4) 0.5 1.5
Associates 1.3 1.8 2.8 1.7 1.4
One-offs 0.0 6.7 0.0 0.0 0.0
Pre-Tax Profit 138.2 135.7 134.1 107.3 70.6
Tax (34.9) (33.8) (33.5) (26.8) (17.6)
Minority Interest (1.2) (0.8) 0.0 0.0 0.0
Net Profit 102.1 101.1 100.6 80.5 52.9
Recurring Net Profit 102.1 94.4 100.6 80.5 52.9
Balance sheet 2014A 2015A 2016F 2017F 2018F
PPE 3.7 4.6 8.6 11.9 14.4
Investment properties 79.4 112.9 112.9 112.9 112.9
Land held for development 214.9 206.9 174.5 144.9 122.9
Other LT Assets 27.4 39.1 26.1 26.1 26.1
Cash/ST Investments 138.1 183.9 244.9 277.9 290.3
Property development cost 72.5 125.1 171.9 212.0 245.5
Inventories 2.4 3.0 3.3 2.7 1.9
Other Current Assets 123.3 98.5 103.3 83.5 61.3
Total Assets 661.8 774.0 845.4 871.8 875.4
ST Debt 35.3 49.4 49.4 49.4 49.4
Other Current Liabilities 105.2 121.8 132.6 107.5 79.3
LT Debt 117.7 139.0 139.0 139.0 139.0
Other LT Liabilities 4.2 1.3 0.5 0.5 0.5
Minority Interest 2.4 2.7 2.7 2.7 2.7
Retained earnings 118.2 178.2 238.6 286.8 318.6
Shareholders' Equity 278.8 281.6 282.6 285.9 285.9
Total Liabilities-Capital 661.8 774.0 845.4 871.8 875.4
Cash Flow (MYRm) 2014A 2015A 2016F 2017F 2018F
Profit before taxation 138.2 135.7 134.1 107.3 70.6
Depreciation 0.6 0.8 0.9 1.8 2.4
Net interest receipts/(payments) 5.8 5.1 1.4 (0.5) (1.5)
Working capital change (99.0) 0.1 2.4 (4.7) (5.3)
Cash tax paid (47.2) (37.0) (33.5) (26.8) (17.6)
Others (incl'd exceptional items) (3.9) (8.1) 0.0 0.0 0.0
Cash flow from operations (5.5) 96.6 105.3 77.0 48.6
Capex (13.3) (34.7) (5.0) (5.0) (5.0)
Disposal/(purchase) 0.0 0.0 0.0 0.0 0.0
Others 0.5 (4.2) 2.1 1.3 1.0
Cash flow from investing (12.8) (39.0) (2.9) (3.7) (4.0)
Debt raised/(repaid) 54.8 35.5 0.0 0.0 0.0
Equity raised/(repaid) 16.1 2.1 1.0 0.0 0.0
Dividends (paid) (26.8) (41.0) (38.2) (40.2) (32.2)
Interest payments 0.0 0.0 0.0 1.0 2.0
Others (8.1) (5.6) 0.0 0.0 0.0
Cash flow from financing 36.0 (9.1) (37.1) (39.2) (30.2)
Change in cash 17.7 48.5 65.3 34.0 14.4
Source: Maybank KE
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January 10, 2017 19
Tambun Indah Land
Valuation and recommendation
Favour RNAV over P/E and P/BV
The property industry is cyclical as it is highly dependent on macroeconomic factors that affect
buying sentiment/demand for properties. This in turn affects sales and hence, the earnings
visibility of property companies. In deriving TI’s fair value, we apply the Revised Net Asset Value
(RNAV) valuation methodology. In our view, RNAV is a better valuation methodology for property
developers than P/E and P/BV as the latter will not be able to capture the intrinsic project / land
values during the early years of development.
RNAV dominated by Pearl City project
Our MYR3.05/sh RNAV estimate for TI is based on the summation of the discounted cash flows of
its launched/to-be-launched individual projects and the land surplus for its existing landbank
which is held for future development between 2017-2022. The latter is valued at MYR52psf, a 5%
discount to latest transaction price of MYR55psf in BK area. Our basis also includes required
returns ranging from 10-12%.
Out of the MYR1.3b RNAV (MYR3.05/sh), 55% is derived from Pearl City project in Simpang Ampat
while the balance 40% is from shareholders fund and 5% is from Bukit Mertajam, Butterworth and
Penang island projects as well as surplus from its investment properties. Note that our RNAV
estimates have yet to include potential land acquisitions.
MYR1.53 TP, 50% discount to RNAV; initiate with a HOLD
In deciding the discounts to be applied on our RNAV estimate, we have also drawn on macro
factors such as the property industry cycle and specific factors such as project locations and
types, the management team and track record in project execution, sales record, profit margin
and balance sheet strength. Currently, we value developers under our coverage at a 30-60%
discount to RNAVs (or 0.4-0.7x P/RNAV).
TI is the only listed Malaysian developer with pure exposure to Penang mainland, hence, it has no
direct comparable in Malaysia. Given its relatively small market capitalization (MYR598m market
capitalization), we have benchmarked TI against Glomac (GLMC MK; market capitalization of
MYR503m). We value TI at MYR1.53/sh on 0.5x P/RNAV, +0.1x above Glomac’s historical average
P/RNAV of 0.4x. The premium valuation is justified by TI’s superior profit margin and relatively
stronger balance sheet compared to Glomac. We are initiating coverage on Tambun Indah with a
HOLD rating.
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January 10, 2017 20
Tambun Indah Land
Valuation basis for developers under our coverage
Price (MYR/share)*
(a)
RNAV (MYR/share)
(b)
P/RNAV TP (MYR/sh) (b) x (c )
Rating Our valuation basis - P/RNAV Stocks Current
P/RNAV (x)
Our valuations - P/RNAV (x)
( c)
Eco World 1.36 2.60 0.52 0.6 1.56 BUY We value Eco World at 0.6x P/RNAV. The 40% discount is to reflect its relatively high net gearing ratio. Also, since most of the land was acquired during the property upcycle in 2012-2013, it would have less flexibility in pricing/product during times of uncertainty.
Glomac 0.70 2.05 0.34 0.4 0.82 HOLD We value Glomac at 0.4x P/RNAV, -0.1x below its historical P/RNAV mean.
Mah Sing 1.46 2.44 0.60 0.6 1.47 HOLD We value Mah Sing at 0.6x P/RNAV. The discount is to reflect its considerable exposure to the high-rise property segment e.g. Icon City, Southville City (offices), Southbay City and KKCC.
SP Setia 3.19 5.13 0.62 0.7 3.59 HOLD We value SP Setia at 0.7x P/RNAV (historical average).
Sunway 3.00 5.79 0.52 0.6 3.36 HOLD We value Sunway at 0.6x P/RNAV. The discount is to reflect its large exposure to the luxury property segment and Iskandar Malaysia. As compared to UEMS, Sunway has a more diversified and recurring earnings base supported by its construction and REIT units.
UEM Sunrise
1.10 2.80 0.39 0.4 1.09 HOLD We value UEM Sunrise at 0.4x P/RNAV. The discount is to reflect its large exposure to the increasingly crowded Iskandar Malaysia.
Tambun Indah
1.38 3.05 0.45 0.5 1.53 HOLD We value Tambun Indah at 0.5x P/RNAV, +0.1x above Glomac (small cap)'s historical P/RNAV mean. The premium is justified by Tambun Indah's superior operating margin and clean balance sheet as compared to Glomac.
* as at 6 Jan 2017 Source: Maybank KE
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January 10, 2017 21
Tambun Indah Land
Our RNAV estimate
Projects Stake (%)
Acre MV BV Surplus Remarks
Landbank (MYRm) (MYRm) (MYRm)
1 Simpang Ampat / Seberang Perai Selatan
100% 339.9 773.7 196.1 577.6 Land to be developed in 2017-2022. We value the land at MYR52psf, a 5% discount to the latest transaction price of MYR55psf in Batu Kawan area
Sub-total: 339.9 773.7 196.1 577.6
NPV
DCF (discount factor: 10.3%-11.6%) Stake (%)
(MYRm)
1 BM Residence 100% 0.1 Condominiums and landed properties
2 Straits Garden 100% 2.3 Business suites, condominiums, apartments and low cost apartments
3 Pearl Residence 100% 0.0 Bungalows, Semi-Ds and terraces
4 Pearl Impian 100% 0.0 Terraces
5 Pearl Avenue 1 100% 0.0 2 & 3-storey shop offices
6 Camellia Park 100% 0.4 Apartments
7 Permai Residence 50% 0.1 2-storey homes
8 Pearl Harmoni 100% 1.0 2-storey homes
9 Bukit Residence 100% 0.6 Gated and non-gated link homes
10 Pearl Avenue 2 100% 2.3 2 & 3-storey shop offices
11 Raintree Park 1 100% 9.8 Semi-Ds, terraces, villas
12 Raintree Park 2 100% 37.0 Gated homes
13 Capri Park 100% 0.1 Apartments
14 Pearl Indah 1 100% 0.2 Landed properties
15 Pearl Square 1 100% 0.3 Shop offices
16 Pearl Square 2 100% 0.2 Shop offices
17 Avenue Garden 100% 14.0 Serviced apartments
18 Pearl Tropika 100% 32.2 2-storey homes
19 Pearl Saujana 1 100% 17.7 Landed properties
20 Pearl 28 100% 4.0 Semi-D, bungalows
21 Pearl Saujana 2 100% 13.5 Landed properties
22 Camellia Park, commercial 100% 0.9 Shop offices
23 Alma 100% 12.1 Landed properties
24 Kota Permai 100% 29.8 Landed properties
25 Palm Garden @ PC 100% 17.0 Landed properties
Sub-total: 195.8
Investment properties Stake (%)
NLA (sq.ft.)
MV (MYRm)
BV (MYRm)
Surplus (MYRm)
1 GEMS International School campus 100% 200,000 65.6 54.0 11.6 MV is based on 5% cap rate
2 Pearl City Mall 50% 300,000 50.1 36.3 6.9 MV is based on 6% cap rate
Sub-total: 18.4
Grand total: 791.9
Shareholders fund as at Dec 2016 (MYRm)
521.2
Proceeds from warrants (exercise price: MYR0.60, expiry date: 30 May 2017)
3.4
Total RNAV (MYR m): 1,316.5
Number of shares (m shares) 425.9
Number of outstanding warrants 5.7
Fully diluted number of shares 431.5
FD RNAV (MYR/share) 3.05 FD target price (MYR/share) - 0.5x
P/RNAV 1.53 +0.1x above small-cap
Glomac's historical average P/RNAV
Source: Company, Maybank KE
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January 10, 2017 22
Tambun Indah Land
FYE 31 Dec FY14A FY15A FY16E FY17E FY18E
Key Metrics
P/E (reported) (x) 8.4 6.8 5.9 7.5 11.4
Core P/E (x) 5.8 6.3 5.9 7.5 11.4
Core FD P/E (x) 5.8 6.3 6.0 7.5 11.4
P/BV (x) 1.5 1.3 1.2 1.1 1.0
P/NTA (x) 1.5 1.3 1.2 1.1 1.0
Net dividend yield (%) 6.9 6.4 6.7 5.3 3.5
FCF yield (%) nm 10.4 16.8 11.9 7.2
EV/EBITDA (x) 5.2 4.7 4.1 4.9 7.5
EV/EBIT (x) 5.2 4.7 4.1 4.9 7.5
INCOME STATEMENT (MYR m)
Revenue 466.8 367.7 408.7 329.0 239.7
Gross profit 160.6 153.2 179.1 144.0 99.1
EBITDA 139.4 129.0 132.6 105.0 67.7
Depreciation 0.0 0.0 0.0 0.0 0.0
Amortisation 0.0 0.0 0.0 0.0 0.0
EBIT 139.4 129.0 132.6 105.0 67.7
Net interest income /(exp) (2.5) (1.8) (1.4) 0.5 1.5
Associates & JV 1.3 1.8 2.8 1.7 1.4
Exceptionals 0.0 6.7 0.0 0.0 0.0
Other pretax income 0.0 0.0 0.0 0.0 0.0
Pretax profit 138.2 135.7 134.1 107.3 70.6
Income tax (34.9) (33.8) (33.5) (26.8) (17.6)
Minorities (1.2) (0.8) 0.0 0.0 0.0
Perpetual securities 0.0 0.0 0.0 0.0 0.0
Discontinued operations 0.0 0.0 0.0 0.0 0.0
Reported net profit 102.1 101.1 100.6 80.5 52.9
Core net profit 102.1 94.4 100.6 80.5 52.9
BALANCE SHEET (MYR m)
Cash & Short Term Investments 115.4 179.6 244.9 277.9 290.3
Accounts receivable 118.0 91.3 101.5 81.7 59.5
Inventory 2.4 3.0 3.3 2.7 1.9
Property, Plant & Equip (net) 3.7 4.6 8.6 11.9 14.4
Intangible assets 0.0 0.0 0.0 0.0 0.0
Investment in Associates & JVs 13.3 22.2 22.2 22.2 22.2
Other assets 408.9 473.3 464.9 475.5 487.0
Total assets 661.8 774.0 845.4 871.8 875.4
ST interest bearing debt 35.3 49.4 49.4 49.4 49.4
Accounts payable 103.9 116.1 129.0 103.9 75.7
LT interest bearing debt 117.7 139.0 139.0 139.0 139.0
Other liabilities 6.0 7.0 4.0 4.0 4.0
Total Liabilities 262.4 311.5 321.5 296.4 268.2
Shareholders Equity 397.0 459.8 521.2 572.7 604.5
Minority Interest 2.4 2.7 2.7 2.7 2.7
Total shareholder equity 399.4 462.5 523.9 575.5 607.2
Perpetual securities 0.0 0.0 0.0 0.0 0.0
Total liabilities and equity 661.8 774.0 845.4 871.8 875.4
CASH FLOW (MYR m)
Pretax profit 138.2 135.7 134.1 107.3 70.6
Depreciation & amortisation 0.0 0.0 0.0 0.0 0.0
Adj net interest (income)/exp 5.8 5.1 1.4 (0.5) (1.5)
Change in working capital (99.0) 0.1 2.4 (4.7) (5.3)
Cash taxes paid (47.2) (37.0) (33.5) (26.8) (17.6)
Other operating cash flow (3.9) (8.1) 0.0 0.0 0.0
Cash flow from operations (5.5) 96.6 105.3 77.0 48.6
Capex (13.3) (34.7) (5.0) (5.0) (5.0)
Free cash flow (18.8) 61.9 100.3 72.0 43.6
Dividends paid (26.8) (41.0) (38.2) (40.2) (32.2)
Equity raised / (purchased) 16.1 2.1 1.0 0.0 0.0
Perpetual securities 0.0 0.0 0.0 0.0 0.0
Change in Debt 54.8 35.5 0.0 0.0 0.0
Perpetual securities distribution 0.0 0.0 0.0 0.0 0.0
Other invest/financing cash flow (7.6) (9.9) 2.1 1.3 1.0
Effect of exch rate changes 0.0 0.0 0.0 0.0 0.0
Net cash flow 17.7 48.5 65.3 33.0 12.4
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January 10, 2017 23
Tambun Indah Land
FYE 31 Dec FY14A FY15A FY16E FY17E FY18E
Key Ratios
Growth ratios (%)
Revenue growth 24.0 (21.2) 11.2 (19.5) (27.1)
EBITDA growth 20.6 (7.5) 2.8 (20.8) (35.6)
EBIT growth 20.6 (7.5) 2.8 (20.8) (35.6)
Pretax growth 17.4 (1.8) (1.2) (20.0) (34.2)
Reported net profit growth 57.2 (1.0) (0.5) (20.0) (34.2)
Core net profit growth 57.2 (7.6) 6.5 (20.0) (34.2)
Profitability ratios (%)
EBITDA margin 29.9 35.1 32.5 31.9 28.2
EBIT margin 29.9 35.1 32.5 31.9 28.2
Pretax profit margin 29.6 36.9 32.8 32.6 29.4
Payout ratio 40.0 37.8 40.0 40.0 40.0
DuPont analysis
Net profit margin (%) 21.9 27.5 24.6 24.5 22.1
Revenue/Assets (x) 0.7 0.5 0.5 0.4 0.3
Assets/Equity (x) 1.7 1.7 1.6 1.5 1.4
ROAE (%) na na na na na
ROAA (%) 17.6 13.2 12.4 9.4 6.1
Leverage & Expense Analysis
Asset/Liability (x) 2.5 2.5 2.6 2.9 3.3
Net gearing (%) (incl perps) 9.4 1.9 net cash net cash net cash
Net gearing (%) (excl. perps) 9.4 1.9 net cash net cash net cash
Net interest cover (x) 55.9 72.1 97.2 na na
Debt/EBITDA (x) 1.1 1.5 1.4 1.8 2.8
Capex/revenue (%) 2.9 9.5 1.2 1.5 2.1
Net debt/ (net cash) 37.6 8.8 (56.5) (89.5) (101.9)
Source: Company; Maybank
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January 10, 2017 24
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Research Offices
REGIONAL
Sadiq CURRIMBHOY
Regional Head, Research & Economics
(65) 6231 5836 [email protected]
WONG Chew Hann, CA
Regional Head of Institutional Research
(603) 2297 8686 [email protected]
ONG Seng Yeow
Regional Head of Retail Research
(65) 6231 5839 [email protected]
TAN Sin Mui
Director of Research
(65) 6231 5849 [email protected]
ECONOMICS
Suhaimi ILIAS Chief Economist Singapore | Malaysia (603) 2297 8682 [email protected]
Tim LEELAHAPHAN Thailand (66) 2658 6300 ext 1420 [email protected]
JUNIMAN Chief Economist, BII Indonesia (62) 21 29228888 ext 29682
STRATEGY
Sadiq CURRIMBHOY
Global Strategist
(65) 6231 5836 [email protected]
Willie CHAN
Hong Kong / Regional
(852) 2268 0631 [email protected]
MALAYSIA
WONG Chew Hann, CA Head of Research (603) 2297 8686 [email protected] • Strategy
Desmond CH’NG, ACA (603) 2297 8680 [email protected] • Banking & Finance
LIAW Thong Jung (603) 2297 8688 [email protected] • Oil & Gas Services- Regional
ONG Chee Ting, CA (603) 2297 8678 [email protected] • Plantations - Regional
Mohshin AZIZ (603) 2297 8692 [email protected] • Aviation - Regional • Petrochem
YIN Shao Yang, CPA (603) 2297 8916 [email protected] • Gaming – Regional • Media
TAN Chi Wei, CFA (603) 2297 8690 [email protected] • Power • Telcos
WONG Wei Sum, CFA (603) 2297 8679 [email protected] • Property
LEE Yen Ling (603) 2297 8691 [email protected] • Building Materials • Glove • Ports • Shipping
Ivan YAP (603) 2297 8612 [email protected] • Automotive • Semiconductor • Technology
Kevin WONG (603) 2082 6824 [email protected] • REITs • Consumer Discretionary
LIEW Wei Han
(603) 2297 8676 [email protected] • Consumer Staples
Tee Sze Chiah Head of Retail Research (603) 2297 6858 [email protected]
HONG KONG / CHINA
Howard WONG Head of Research (852) 2268 0648 [email protected] • Strategy • Oil & Gas - Regional
Benjamin HO (852) 2268 0632 [email protected] • Consumer & Auto
Jacqueline KO, CFA (852) 2268 0633 [email protected] • Consumer Staples & Durables
Ka Leong LO, CFA (852) 2268 0630 [email protected] • Consumer Discretionary & Auto
Mitchell KIM (852) 2268 0634 [email protected] • Internet & Telcos
Ning MA (852) 2268 0672 [email protected] • Insurance
Sonija LI, CFA, FRM (852) 2268 0641 [email protected] • Gaming
Stefan CHANG, CFA (852) 2268 0675 [email protected] • Technology – Regional
INDIA
Jigar SHAH Head of Research
(91) 22 6623 2632 [email protected]
• Strategy • Oil & Gas • Automobile • Cement
Vishal MODI
(91) 22 6623 2607 [email protected]
• Banking & Financials
Neerav DALAL
(91) 22 6623 2606 [email protected]
• Software Technology • Telcos
SINGAPORE
Neel SINHA Head of Research (65) 6231 5838 [email protected] • Strategy • SMID Caps – Regional
Gregory YAP (65) 6231 5848 [email protected] • SMID Caps • Technology & Manufacturing • Telcos
Derrick HENG, CFA (65) 6231 5843 [email protected] • Transport • Property • REITs (Office)
John CHEONG, CFA (65) 6231 5845 [email protected] • Small & Mid Caps • Healthcare
Ng Li Hiang (65) 6231 5840 [email protected] • Banks
INDONESIA
Isnaputra ISKANDAR Head of Research (62) 21 8066 8680 [email protected] • Strategy • Metals & Mining • Cement
Rahmi MARINA (62) 21 8066 8689 [email protected] • Banking & Finance
Aurellia SETIABUDI (62) 21 8066 8691 [email protected] • Property
Pandu ANUGRAH (62) 21 8066 8688 [email protected] • Infra • Construction • Transport• Telcos
Janni ASMAN (62) 21 8066 8687 [email protected] • Cigarette • Healthcare • Retail
Adhi TASMIN (62) 21 8066 8694 [email protected] • Plantations
Anthony LUKMAWIJAYA (62) 21 8066 8690 [email protected] • Aviation
PHILIPPINES
Michael BENGSON Head of Research (63) 2 849 8840 [email protected] • Strategy • Utilities • Conglomerates • Telcos Lovell SARREAL (63) 2 849 8841 [email protected] • Consumer • Media • Cement
Rommel RODRIGO (63) 2 849 8839 [email protected] • Conglomerates • Property • Gaming • Ports/ Logistics
Katherine TAN (63) 2 849 8843 [email protected] • Banks • Construction
THAILAND
Maria LAPIZ Head of Institutional Research Dir (66) 2257 0250 | (66) 2658 6300 ext 1399 [email protected] • Strategy • Consumer • Materials • Ind. Estates
Sittichai DUANGRATTANACHAYA (66) 2658 6300 ext 1393 [email protected] • Services Sector • Transport
Yupapan POLPORNPRASERT (66) 2658 6300 ext 1394 [email protected] • Oil & Gas
Tanawat RUENBANTERNG (66) 2658 6300 ext 1395 [email protected] • Banks & Diversified Financials
Vorapoj Hongpinyo (66) 2658 6300 ext 1392 [email protected] • Real Estate & Contractors
Sukit UDOMSIRIKUL Head of Retail Research (66) 2658 6300 ext 5090 [email protected]
Mayuree CHOWVIKRAN (66) 2658 6300 ext 1440 [email protected] • Strategy
Padon VANNARAT (66) 2658 6300 ext 1450 [email protected] • Strategy
Surachai PRAMUALCHAROENKIT (66) 2658 6300 ext 1470 [email protected] • Auto • Conmat • Contractor • Steel
Suttatip PEERASUB (66) 2658 6300 ext 1430 [email protected] • Media • Commerce
Sutthichai KUMWORACHAI (66) 2658 6300 ext 1400 [email protected] • Energy • Petrochem
Termporn TANTIVIVAT (66) 2658 6300 ext 1520 [email protected] • Property
Jaroonpan WATTANAWONG (66) 2658 6300 ext 1404 [email protected] • Transportation • Small cap
VIETNAM
LE Hong Lien, ACCA Head of Institutional Research (84) 8 44 555 888 x 8181 [email protected] • Strategy • Consumer • Diversified • Utilities
THAI Quang Trung, CFA, Deputy Manager, Institutional Research (84) 8 44 555 888 x 8180 [email protected] • Real Estate • Construction • Materials
Le Nguyen Nhat Chuyen (84) 8 44 555 888 x 8082 [email protected] • Oil & Gas
NGUYEN Thi Ngan Tuyen, Head of Retail Research (84) 8 44 555 888 x 8081 [email protected] • Food & Beverage • Oil&Gas • Banking
TRINH Thi Ngoc Diep (84) 4 44 555 888 x 8208 [email protected] • Technology • Utilities • Construction
PHAM Nhat Bich (84) 8 44 555 888 x 8083 [email protected] • Consumer • Manufacturing • Fishery
NGUYEN Thi Sony Tra Mi (84) 8 44 555 888 x 8084 [email protected] • Port operation • Pharmaceutical • Food & Beverage
TRUONG Quang Binh (84) 4 44 555 888 x 8087 [email protected] • Rubber plantation • Tyres and Tubes • Oil&Gas
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January 10, 2017 25
Tambun Indah Land
APPENDIX I: TERMS FOR PROVISION OF REPORT, DISCLAIMERS AND DISCLOSURES
DISCLAIMERS This research report is prepared for general circulation and for information purposes only and under no circumstances should it be considered or intended as an offer to sell or a solicitation of an offer to buy the securities referred to herein. Investors should note that values of such securities, if any, may fluctuate and that each security’s price or value may rise or fall. Opinions or recommendations contained herein are in form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from the relevant jurisdiction’s stock exchange in the equity analysis. Accordingly, investors’ returns may be less than the original sum invested. Past performance is not necessarily a guide to future performance. This report is not intended to provide personal investment advice and does not take into account the specific investment objectives, the financial situation and the particular needs of persons who may receive or read this report. Investors should therefore seek financial, legal and other advice regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report.
The information contained herein has been obtained from sources believed to be reliable but such sources have not been independently verified by Maybank Investment Bank Berhad, its subsidiary and affiliates (collectively, “MKE”) and consequently no representation is made as to the accuracy or completeness of this report by MKE and it should not be relied upon as such. Accordingly, MKE and its officers, directors, associates, connected parties and/or employees (collectively, “Representatives”) shall not be liable for any direct, indirect or consequential losses or damages that may arise from the use or reliance of this report. Any information, opinions or recommendations contained herein are subject to change at any time, without prior notice.
This report may contain forward looking statements which are often but not always identified by the use of words such as “anticipate”, “believe”, “estimate”, “intend”, “plan”, “expect”, “forecast”, “predict” and “project” and statements that an event or result “may”, “will”, “can”, “should”, “could” or “might” occur or be achieved and other similar expressions. Such forward looking statements are based on assumptions made and information currently available to us and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those expressed in any forward looking statements. Readers are cautioned not to place undue relevance on these forward-looking statements. MKE expressly disclaims any obligation to update or revise any such forward looking statements to reflect new information, events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
MKE and its officers, directors and employees, including persons involved in the preparation or issuance of this report, may, to the extent permitted by law, from time to time participate or invest in financing transactions with the issuer(s) of the securities mentioned in this report, perform services for or solicit business from such issuers, and/or have a position or holding, or other material interest, or effect transactions, in such securities or options thereon, or other investments related thereto. In addition, it may make markets in the securities mentioned in the material presented in this report. One or more directors, officers and/or employees of MKE may be a director of the issuers of the securities mentioned in this report to the extent permitted by law.
This report is prepared for the use of MKE’s clients and may not be reproduced, altered in any way, transmitted to, copied or distributed to any other party in whole or in part in any form or manner without the prior express written consent of MKE and MKE and its Representatives accepts no liability whatsoever for the actions of third parties in this respect.
This report is not directed to or intended for distribution to or use by any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. This report is for distribution only under such circumstances as may be permitted by applicable law. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Without prejudice to the foregoing, the reader is to note that additional disclaimers, warnings or qualifications may apply based on geographical location of the person or entity receiving this report.
Malaysia Opinions or recommendations contained herein are in the form of technical ratings and fundamental ratings. Technical ratings may differ from fundamental ratings as technical valuations apply different methodologies and are purely based on price and volume-related information extracted from Bursa Malaysia Securities Berhad in the equity analysis.
Singapore This report has been produced as of the date hereof and the information herein may be subject to change. Maybank Kim Eng Research Pte. Ltd. (“Maybank KERPL”) in Singapore has no obligation to update such information for any recipient. For distribution in Singapore, recipients of this report are to contact Maybank KERPL in Singapore in respect of any matters arising from, or in connection with, this report. If the recipient of this report is not an accredited investor, expert investor or institutional investor (as defined under Section 4A of the Singapore Securities and Futures Act), Maybank KERPL shall be legally liable for the contents of this report, with such liability being limited to the extent (if any) as permitted by law.
Thailand Except as specifically permitted, no part of this presentation may be reproduced or distributed in any manner without the prior written permission of Maybank Kim Eng Securities (Thailand) Public Company Limited. Maybank Kim Eng Securities (Thailand) Public Company Limited (“MBKET”) accepts no liability whatsoever for the actions of third parties in this respect.
Due to different characteristics, objectives and strategies of institutional and retail investors, the research reports of MBKET Institutional and Retail Research Department may differ in either recommendation or target price, or both. MBKET Retail Research is intended for retail investors (http://kelive.maybank-ke.co.th) while Maybank Kim Eng Institutional Research is intended only for institutional investors based outside Thailand only.
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand and the market for Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey may be changed after that date. MBKET does not confirm nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1), Annual Report (Form 56-2), or other relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a third party. It is not an assessment of operation and is not based on any inside information. Since this assessment is only the assessment result as of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information. Nevertheless, MBKET does not confirm, verify, or certify the accuracy and completeness of the assessment result.
US This third-party research report is distributed in the United States (“US”) to Major US Institutional Investors (as defined in Rule 15a-6 under the Securities Exchange Act of 1934, as amended) only by Maybank Kim Eng Securities USA Inc (“Maybank KESUSA”), a broker-dealer registered in the US (registered under Section 15 of the Securities Exchange Act of 1934, as amended). All responsibility for the distribution of this report by Maybank KESUSA in the US shall be borne by Maybank KESUSA. This report is not directed at you if MKE is prohibited or restricted by any legislation or regulation in any jurisdiction from making it available to you. You should satisfy yourself before reading it that Maybank KESUSA is permitted to provide research material concerning investments to you under relevant legislation and regulations. All U.S. persons receiving and/or accessing this report and wishing to effect transactions in any security mentioned within must do so with: Maybank Kim Eng Securities USA Inc. 777 Third Avenue 21st Floor New York, New York 1- (212) 688-8886 and not with, the issuer of this report.
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January 10, 2017 26
Tambun Indah Land
Disclosure of Interest
Malaysia: MKE and its Representatives may from time to time have positions or be materially interested in the securities referred to herein and may further act as market maker or may have assumed an underwriting commitment or deal with such securities and may also perform or seek to perform investment banking services, advisory and other services for or relating to those companies.
Singapore: As of 10 January 2017, Maybank KERPL and the covering analyst do not have any interest in any companies recommended in this research report.
Thailand: MBKET may have a business relationship with or may possibly be an issuer of derivative warrants on the securities /companies mentioned in the research report. Therefore, Investors should exercise their own judgment before making any investment decisions. MBKET, its associates, directors, connected parties and/or employees may from time to time have interests and/or underwriting commitments in the securities mentioned in this report.
Hong Kong: As of 10 January 2017, KESHK and the authoring analyst do not have any interest in any companies recommended in this research report.
India: As of 10 January 2017, and at the end of the month immediately preceding the date of publication of the research report, KESI, authoring analyst or their associate / relative does not hold any financial interest or any actual or beneficial ownership in any shares or having any conflict of interest in the subject companies except as otherwise disclosed in the research report. In the past twelve months KESI and authoring analyst or their associate did not receive any compensation or other benefits from the subject companies or third party in connection with the research report on any account what so ever except as otherwise disclosed in the research report.
MKE may have, within the last three years, served as manager or co-manager of a public offering of securities for, or currently may make a primary market in issues of, any or all of the entities mentioned in this report or may be providing, or have provided within the previous 12 months, significant advice or investment services in relation to the investment concerned or a related investment and may receive compensation for the services provided from the companies covered in this report.
OTHERS
Analyst Certification of Independence
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
Reminder
Structured securities are complex instruments, typically involve a high degree of risk and are intended for sale only to sophisticated investors who are capable of understanding and assuming the risks involved. The market value of any structured security may be affected by changes in economic, financial and political factors (including, but not limited to, spot and forward interest and exchange rates), time to maturity, market conditions and volatility and the credit quality of any issuer or reference issuer. Any investor interested in purchasing a structured product should conduct its own analysis of the product and consult with its own professional advisers as to the risks involved in making such a purchase.
No part of this material may be copied, photocopied or duplicated in any form by any means or redistributed without the prior consent of MKE.
Definition of Ratings
Maybank Kim Eng Research uses the following rating system
BUY Return is expected to be above 10% in the next 12 months (excluding dividends)
HOLD Return is expected to be between - 10% to +10% in the next 12 months (excluding dividends)
SELL Return is expected to be below -10% in the next 12 months (excluding dividends)
Applicability of Ratings
The respective analyst maintains a coverage universe of stocks, the list of which may be adjusted according to needs. Investment ratings are only applicable to the stocks which form part of the coverage universe. Reports on companies which are not part of the coverage do not carry investment ratings as we do not actively follow developments in these companies.
UK This document is being distributed by Maybank Kim Eng Securities (London) Ltd (“Maybank KESL”) which is authorized and regulated, by the Financial Conduct Authority and is for Informational Purposes only. This document is not intended for distribution to anyone defined as a Retail Client under the Financial Services and Markets Act 2000 within the UK. Any inclusion of a third party link is for the recipients convenience only, and that the firm does not take any responsibility for its comments or accuracy, and that access to such links is at the individuals own risk. Nothing in this report should be considered as constituting legal, accounting or tax advice, and that for accurate guidance recipients should consult with their own independent tax advisers.
DISCLOSURES Legal Entities Disclosures Malaysia: This report is issued and distributed in Malaysia by Maybank Investment Bank Berhad (15938- H) which is a Participating Organization of Bursa Malaysia Berhad and a holder of Capital Markets and Services License issued by the Securities Commission in Malaysia. Singapore: This report is distributed in Singapore by Maybank KERPL (Co. Reg No 198700034E) which is regulated by the Monetary Authority of Singapore. Indonesia: PT Maybank Kim Eng Securities (“PTMKES”) (Reg. No. KEP-251/PM/1992) is a member of the Indonesia Stock Exchange and is regulated by the Financial Services Authority (Indonesia). Thailand: MBKET (Reg. No.0107545000314) is a member of the Stock Exchange of Thailand and is regulated by the Ministry of Finance and the Securities and Exchange Commission. Philippines: Maybank ATRKES (Reg. No.01-2004-00019) is a member of the Philippines Stock Exchange and is regulated by the Securities and Exchange Commission. Vietnam: Maybank Kim Eng Securities Limited (License Number: 117/GP-UBCK) is licensed under the State Securities Commission of Vietnam. Hong Kong: KESHK (Central Entity No AAD284) is regulated by the Securities and Futures Commission. India: Kim Eng Securities India Private Limited (“KESI”) is a participant of the National Stock Exchange of India Limited and the Bombay Stock Exchange and is regulated by Securities and Exchange Board of India (“SEBI”) (Reg. No. INZ000010538). KESI is also registered with SEBI as Category 1 Merchant Banker (Reg. No. INM 000011708) and as Research Analyst (Reg No: INH000000057) US: Maybank KESUSA is a member of/ and is authorized and regulated by the FINRA – Broker ID 27861. UK: Maybank KESL (Reg No 2377538) is authorized and regulated by the Financial Services Authority.
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January 10, 2017 27
Tambun Indah Land
Malaysia Maybank Investment Bank Berhad
(A Participating Organisation of
Bursa Malaysia Securities Berhad)
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Inc
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Stockbroking Business:
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2nd Floor, The International,
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Tel: (91) 22 6623 2600
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(Thailand) Public Company Limited
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Bangkok 10330, Thailand
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Prince Mohammed bin Abdulaziz
Street P.O. Box 126575
Jeddah 21352
Tel: (966) 2 6068686
Fax: (966) 26068787
South Asia Sales Trading Kevin Foy
Regional Head Sales Trading
Tel: (65) 6636-3620
US Toll Free: 1-866-406-7447
North Asia Sales Trading Andrew Lee
Tel: (852) 2268 0283
US Toll Free: 1 877 837 7635
Malaysia Joann Lim [email protected] Tel: (603) 2717 5166
Thailand Tanasak Krishnasreni [email protected] Tel: (66)2 658 6820
Indonesia Harianto Liong [email protected] Tel: (62) 21 2557 1177
London Scott Kinnear-Nock [email protected] Tel: (44) 207-332-0221
New York Andrew Dacey [email protected] Tel: (212) 688 2956
India Manish Modi [email protected] Tel: (91)-22-6623-2601
Vietnam Patrick Mitchell
Tel: (84)-8-44-555-888 x8080
Philippines Keith Roy [email protected] Tel: (63) 2 848-5288
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