Company Focus
Malaysia Equity Research PP 11272/8/2004
26 May 2004
Issue Price: RM1.20
Fair Value: RM2.20
Ibraco Berhad
Closing on: 26 May
Listing on: 16 Jun
Sarawak property play
At a Glance
Main Board bound Ibraco is an established property developer in Kuching, Sarawak,
focussing predominantly on building residential houses. The Group has ongoing projects
totalling an estimated sales value of RM398.1m, and future development projects with
combined sales projection of RM813.8m. Attaching a P/E multiple of 9x on the Group’s
FY04 EPS of 24.5 sen, we have pegged a fair value of RM2.20 for Ibraco shares.
LISTING DETAILS
• A premier property developer. The Group’s flagship property development project is the
Tabuan Jaya township, a prime residential area located 7km south east of Kuching city
centre. Since 1975, the Group has launched and completed 4,920 property units with a
combined sales value of RM668.9m in the Tabuan Jaya-Muara Tabuan area. More
impressively, 99.9% of all the completed properties have been sold, thereby establishing
itself as a reputable property developer in Kuching.
Issue Manager:
Funds Raised (RMm):
Shares on offer (m):
New Shares (m):
Vendor Shares (m):
Placement Shs (m):
Public Offer (m):
• Ongoing and future projects to contribute RM1.2bn in property sales. The Group
currently owns a land bank of approximately 900 acres (of which 500 acres have been
approved for development), located mainly in the Kuching area. Ongoing projects will see
the development of 1,581 residential, commercial and industrial units with an estimated
sales value of RM398.1m. And over the next 5 years, the Group plans are to develop a
further 3,799 units of various property types with an estimated sales value of RM813.8m.
POST LISTING
Ord Share Cap (m):
90.0
Mkt Cap (RMm):
198.0
Est Free Float %:
27.4%
* Based on our RM2.20 fair value
Sector: Property Development
Issue Statistics:
Am
Merc
19.1
15.9
15.9
12.9
3.0
USE OF PROCEEDS (RMm)
8.0
2.5
8.6
• Fair value at RM2.20/share. Using a basket of recently listed property peers for valuation Repayment of loans
comparison, we have set a target P/E multiple of 9x for Ibraco shares. Based on the listing Est. listing expense
prospectus FY04 EPS forecast of 24.5 sen, this translates to a fair value of RM2.20/share. Working capital
At this price, Ibraco is valued at a market capitalisation of RM198m, which is comparable
with property companies like Asas Dunia, Country View, FACB Resorts and Keladi Maju.
Earnings & Valuations
Historical Financial Summary
Jan-02A
Jan-03A Dec-03A@
Jan-02A Jan-03A Dec-03A@ Dec-04F
52.0
48.9
69.2
52.0
48.9
69.2
145.3 Turnover
16.9
17.7
16.9
16.9
17.7
16.9
n.a. EBITDA
Pretax Profit
16.4
17.0
33.0
16.4
17.0
33.0
29.2 Net Profit
11.8
11.4
28.6
11.8
11.4
28.6
22.1
13.1
12.6
31.8
24.5 Margin Analysis (%)
32.5
36.1
24.4
469.6
(3.7)
152.3
(22.3) EBITDA
Pretax Profit
31.5
34.8
47.7
16.8
17.5
6.9
9.0 Net Profit
22.7
23.2
41.3
n.m.
n.m.
n.m.
3.6
n.m.
n.m.
n.m.
1.6 @ - 11-mth period ended 31-Dec-03. Includes
exceptional gain of RM16.9m
n.m.
n.m.
n.m.
n.m.
FY (RMm)
Turnover
EBITDA
Pre-Tax Profit
Net Profit
EPS (sen) *
EPS Growth (%)
P / E Ratio (x) ^
DPS (sen)
Div Yield (%) ^
ROE (%)
Book Value (RM)
n.m.
n.m.
1.33
n.m.
P / Book Value (x)^
n.m.
n.m.
1.7
n.m.
MALAYSIA
Stock Name
Equine Capital
Plenitude
Yu Neh Huat
E&O
MK Land
SP Setia
PE (x)
8.9
8.1
10.7
11.0
13.7
12.9
Ownership:
Deanna Ibrahim
Wan Kamal Ibrahim
Dr Sharifah Ibrahim
Wan Aziz Ibrahim
Ibraco Properties SB
16.4%
16.4%
16.4%
16.4%
6.8%
Business Description:
Customers: Housebuyers,
mainly in the Kuching area in
Sarawak.
Sector Historical Valuation
Mkt Cap (RMm)
135.0
249.8
352.7
724.4
3,084.8
2,142.6
Deanna Ibrahim @Sorayah bt
Abdullah
Group Chairman
Wan Kamal Ibrahim MD/CEO
Dr. Sharifah Deborah Sophia
Ibrahim
ED
Key Activities & Products:
Residential, commercial and
industrial property development
in Sarawak.
* - Based on enlarged share capital of 90.0m
^ - Based on our fair value of RM2.20
F - Based on prospectus forecast
@ - 11-mth period ended 31-Dec-03. Includes
exceptional gain of RM16.9m
Listed Peers
Management:
Not meaningful
Malaysia Research Team· 603-2711 2222· general@hwangdbsvickers.com.my
Refer to important disclosures at the end of this report
Suppliers: Suppliers of building
materials, civil and eletrical
works, masonry and carpentry.
Geographic Spread:
East Malaysia
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Company Focus
New Listing Fact Sheet
Background
• A property developer focussing mainly on residential houses. The Ibraco Group has been involved in
property development activities over the past 30 years, developing and selling residential, commercial and
industrial properties. Its flagship project is the Tabuan Jaya township, a prime residential area located 7km
south east of Kuching, Sarawak. Since 1974, the Group has completed 4,920 units consisting of residential
(95.5%), commercial (2.5%) and industrial (2.0%) properties encompassing 850 acres of land. Of which, an
impressive 99.9% of all completed units have been sold and handed over to buyers.
• Quick review of the Sarawak property market. According to the Property Market Report 2003, the property
market in Sarawak was sluggish for the first three quarters of 2003. The main component of the property
market in Sarawak is the residential sub-sector, which accounted for 44.6% of total transactions from 1Q033Q03. Whilst the overall number and value of transactions decreased during the period, the prices of residential
properties remained unchanged, with preferred locations such as Tabuan and Jalan Matang recording a price
increase of between 5%-15%, and demand for units below RM200,000 remained encouraging.
Prospects
• Ample land bank for future property development activities. Ibraco’s existing land bank stands at
approximately 900 acres, situated primarily in Kuching. Of which, 500 acres have been approved for
development, which includes 184 acres that are currently being developed in on-going residential and industrial
projects. In addition, Ibraco has an option to acquire approximately 255 acres of land (of which 96 acres have
been approved for development) from Ibraco Properties Sdn Bhd (IPSB) at a market price to be determined by
an independent registered valuer. IPSB is the investment holding company of the substantial shareholders who
collectively own 72.6% of Ibraco post-listing.
• Ongoing and future projects to contribute RM1.2bn in property sales. The Group currently has 7 ongoing
projects with an estimated sales value of RM398.1m. This comprises 1,581 units of residential (including low
cost housing) and commercial properties, to be completed between 4Q04 and 4Q06. As at 31 Mar 04, 396
residential units have been already sold, representing a take-up rate of 64.6% of the total units launched.
Management will also be undertaking the development of a 430-acre township to be called Tabuan Jaya Baru.
This project will be developed over 7 phases, with Phase 1 and 2 already underway. The remaining phases,
which comprise 1,764 units of various development types with estimated sales value of RM492.6m, will be
launched from 3Q05 onwards with completion between 3Q07 and 2Q10.
Additional future property projects will be the developments of Tabuan Heights, Muara Tabuan and Stutong
Low Cost Housing. The combined sales value of these projects, scheduled for completion between 1Q07 and
2Q10, is estimated at RM321.2m.
• Proforma NTA of RM1.33. The Group’s financial position is expected to strengthen slightly after the
flotation exercise. In particular, following the RM8.0m debt repayment using part of the IPO proceeds, total
borrowings for the Group will be reduced from RM55.4m previously to RM47.4m. Accordingly, adjusting for
a cash amount of RM15.7m, net gearing for the Group will drop from 33.2% before to 26.5%.
After going public, on a proforma basis, the NTA per Ibraco share will stand at RM1.33. This has not factored
in a revaluation surplus (net of deferred taxation) of RM44.2m arising from a revaluation exercise that was
carried out as part of the listing process. If the revaluation surplus were to be booked in, the adjusted NTA per
share would rise to RM1.82.
• Our fair value is set at RM2.20. In our valuation model, we have pencilled in a benchmark P/E ratio of 9x,
derived from the average of our basket of recently-listed property peers, and at a 25% discount to the large-cap
property counters under our coverage (see table overleaf for valuation comparisons). Based on the prospectus
FY04 EPS projection of 24.5 sen, we have arrived at a fair value of RM2.20 for Ibraco shares. At a market
capitalisation of RM198m, Ibraco will be ranked in the same league as other listed property counters like Asas
Dunia, Country View, FACB Resorts and Keladi Maju.
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Company Focus
New Listing Fact Sheet
Stock Comparison
Listed on
Ibraco ^
Equine Capital @
Plenitude #
Yu Neh Huat *
Average
E&O Property @
MK Land @
SP Setia @
Average
16-Jun-04
28-Oct-03
18-Nov-03
9-Dec-03
Share price on
25-May (RM)
2.20
0.90
1.85
1.35
Calendarised EPS
Dec-04
24.5
10.1
22.7^^
12.6
-
0.65
2.57
3.78
5.9
18.8
29.4
PE (x)
9.0
8.9
8.1
10.7
9.3
11.0
13.7
12.9
12.5
NTA / sh
(RM)
1.33
1.54
2.66
1.06
1.42
0.74
2.32
P/B
(x)
1.7
0.6
0.7
1.3
0.9
0.5
3.5
1.6
1.9
Market Cap
(RMm)
198.0
135.0
249.8
352.7
724.4
3,084.8
2,142.6
^ - Based on our fair value of RM2.20
* - Based on consensus forecast
# - Based on prospectus forecast
@ - Based on HDBSV Research estimates
^^ - Not calendarised (June year-end)
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