Why I Like IJM Land

Property is hot again, and many property counters have been moving quite a bit. I particularly like IJM Land at levels below RM1.85. Its a prime beneficiary of asset reflation. Its RNAV is close to RM3.10. But of course it will not get to that level anytime soon.

IJM Land's star is hitched onto two projects: one is The Light project in Penang. Recent good take up rates for neighbouring launches such as Platino and Nautilus Bay gives a good indication that The Light (currently has launched Light Linear and Light Point) will do well too. The scrapping of the huge but controversial PGCC actually puts the spotlight back on The Light as the primero uno projecto in Penango. Pardon my Japanese.



The other is its strategic location of its latest property development project in Nusa Duta. The project is different from other existing and on-going projects within a 5km radius from Nusa Duta as it did not have commercial properties within its plot. The project is surrounded with existing and upcoming conveniences and facilities developed by other developers, such as Bukit Indah AEON shopping mall, banks, schools, fast food outlets, a police station and Giant and Tesco hypermarkets which will open by the year-end and early 2010. There is also the on-going RM1.3bil new coastal highway linking Nusajaya and the Johor Baru city centre, which will pass through the project, and would boost accessibility to Nusa Duta.

Presently, IJM Corp has 4.04ha in Permas Jaya and 101.17ha in Mount Austin, both within Iskandar Malaysia, and 477.52ha in Sebana Cove in Kota Tinggi district in the eastern part of Johor. When IJM Land Bhd acquired 1,188 acres in Johor’s Sebana Cove marina from AMDB Bhd last August for a mere RM120 million, many were sceptical. Now its worth a whole lot more money.

Has an issued capital of 1.1bn shares, a 52 week high-low of RM2.28-RM0.55. The other thing is that the counter has a limited free float which makes it very easy to see its share price move just catching the right trend. IJM Corp has 77% in IJM Land locked up while Singapore's giant GIC has 7%. The trend is now, Property is hot and I think it can take out its 52 week high easily.

IJM LAND BHD's pre-tax profit for financial year ended March 31, 2009 rose to RM68.303 million from RM54.893 million in the same period of 2008. In actual fact, the real operating results of IJM Land was a lot better save for certain one off items which dragged down profits, legacy issues from the merger with RB Land. Has one of the lowest net gearing ratio among its peers at 0.2x, the rest are around 0.5x. Can gear up to take advantage of any decent opportunity.

p/s photos: Kanjiya Shihori

Chewing The Fat About Cowboys & Indians

I have a few friends who work at senior positions at Bursa and Securities Commission, not trying to do name dropping, just the facts. We always end up up with heated debates on issues surrounding the markets. The latest was a friend's concerns over the cowboy-ness of our markets.

A cowboy market can be termed as a market that is full of syndicates and massive rampings and "lootings" by unscrupulous players. My friend was concerned about that and wanted to look for ways to rein them in with their own lassos. I basically told my friend that you need some "cowboy-ness" in every market. When I forced my friend to come out with cowboy names, names such as SAAG, Huaan, Mulpha, Mobif, Compugates... were mentioned. The theory goes that these counters would have less than 100,000 shares traded normally and can be considered to be dead ducks for most of the year. Suddenly out of the blue, these counters can register daily volumes in excess of 10 million a day! Surely they were rigged!!!

What are syndicates but the collusion among a few players. If the intention is to control the counter, ramp it up and dump, then its sinister and illegal, and should be prosecuted. When they do not really have control, i.e. a relatively large free float, like KNM, you cannot say these counters are controlled even though there may be syndicates behind these counters. Many syndicates do have the controlling shareholders behind them - if you think syndicates do not exist, please go fly a wau bulan.

I am not asking the Bursa or SC to ignore some of the more unscrupulous activity. I am basically voicing out that you need some element of cowboy-ness in every market. If the counter has sufficient liquidity and a good free float, and it appears to be high on volume list, its best to let things be. If the counter appears to be controlled - e.g. more than 50%-70% being tied up and the rampings seems rampant, then by all means query the company. The trouble is 99.9999% of all companies queried will answer that they are not aware of any news, developments or business activities that would have led to such irrational activity in their share's volume and price.

The SC and Bursa SHOULD look closely when certain groups of players buy and sell the same shares among themselves, and when that level is more than say 50% of total volume traded in a day. The SC and Bursa should have the ability to look at trades breakdowns to get at those information. But that alone is not a sufficient "bad factor".

Buying and selling can also be pure day trading, which cannot and should not be faulted. Heck, even EPF buys and sell the same shares in the same day.

The SC and Bursa are there to maintain some sort of integrity in the market and to make sure the public are not duped. It is better to have "share gains threshold" before launching a thorough investigation into the manipulation or syndicate activities. I would propose that:

a) put a company on your red alert list if a stock gains more than 50% in value over a 4 week period

b) an investigation should be launched if the said gains is also accompanied by: massive "private placements" activity; and/or certain individuals or groups recording same buys/sells activity that accounts for more than 50% of daily volume

Other than that, it is better to let cowboys be cowboys, you need that element to bring back the crowds. Its a necessary part of a healthy functioning market. Btw, I also told my friends that there are now way tooo... many lawyers working at Bursa and the SC, trying to monitor and run the local markets. Its not healthy, its too legalistic... and most importantly, most lacked market savvy-ness and an appreciation of market nuances, which are paramount in order to govern effectively and successfully. In the end, you will end up with just one of the two, effective but not successful, or successful but not effective.




p/s photos: Kanjiya Shihori