DBS Vickers: YTL Land - It's Showtime!
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Capers first block launching this weekend at RM600psf, expect sellout following 5-year pent-up demand.

Asset injection by YTL Corp. expected to be completed by mid-11; potential earnings upside from Sentosa Cove contribution.

Maintain BUY and RM2.70 TP; biggest beneficiary of MRT (66% of RNAV exposed to interchanges i.e. Sentul, KL Sentral, Bukit Bintang).
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DBS Vickers, March 23, 2011
By Yee Mei Hui

YTL Land
Buy
Target Price: RM2.70

- Capers first block launching this weekend at RM600psf, expect sellout following 5-year pent-up demand

- Asset injection by YTL Corp. expected to be completed by mid-11; potential earnings upside from Sentosa Cove contribution

- Maintain BUY and RM2.70 TP; biggest beneficiary of MRT (66% of RNAV exposed to interchanges i.e. Sentul, KL Sentral, Bukit Bintang)


Off the block. Capers condo (Block A) at Sentul East will be launched this weekend at RM600psf ASP (Block B likely ~RM700psf later). Built-up is 900 -3000sf with 1300-1500sf typical size. Given bite-size RM540k-900k unit price and no launches at Sentul since 2006 (last was Saffron at RM300psf), Capers should see good response. YTLL has strong branding/following, with most projects snapped up at launch. The launch is significant as it: a) Implies ~RM500psf land value for Sentul (assuming 25% margin, RM300-400psf construction cost, 4x plot ratio); and b) Marks the start of an aggressive RM2b launch pipeline which will propel YTLL into a strong earnings growth phase. YTLL aims to gradually raise ASP to RM1000psf, which should be achievable with rising interest for properties near MRT interchanges (Sentul only 3-4 stops from KLCC on the proposed Circle Line).


Bright prospects. In yesterdays interview with BFM 89.9, Tan Sri Francis Yeoh said YTLL is set to turn into a global developer with landbank in Malaysia, Singapore and Japan (Niseko Village in the longer term). YTL Group has a strong track record of selling luxury properties (e.g. 31 units of Sentosa Cove villas at >US$10m/unit), and will transfer YTL Singapore MD to YTLL to spearhead development here. Tan Sri is bullish on Sentul (emulates New Yorks SoHo district), which prospects should be further boosted by the MRT. The KL-Singapore bullet train, if realised, will also re-rate KL property prices substantially. YTL Corp would eventually privatise all subsidiaries (gradually raising its stake via ICULS). YTLL might pay its first dividend when its RM118m accumulated losses are reversed (possibly with Sentosa Cove contribution post-asset injection in mid-2011; yet to be factored into our earnings estimates).


Top pick in sector. We expect Sentul land values to rise to RM1000psf in 3-5 years, driven by the MRT, and higher ASPs and plot ratios (land around KLCC is currently fetching RM2400psf). This would boost YTLLs RNAV by 49% from RM2.68 to RM3.98. We expect exponential earnings growth (3-year CAGR: 47%) led by higher launches and margin expansion for Sentul.


Also read this article at http://www.ytlcommunity.com/commnews/shown...sp?newsid=57945