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PP 7767/09/2010(025354)

Malaysia
RHB Research
Institute Sdn Bhd

New Listing A member of the


RHB Banking Group
Company No: 233327 -M

Ivory Properties Group 27 July 2010


MARKET DATELINE

Issue / Offer : RM1.00


Public Issue of 44.9m New Shares & Offer For Sale Of 16.2m Price
Existing Shares Fair Value : RM1.18

Investment Statistics Bloomberg Ticker : IVORY MK


Net EPS Net Net
FYE Turnover Profit EPS Growth PER P/NTA Gearing ROE Div Yield
Dec (RMm) (RMm) (sen) (%) (x) (x) (x) (%) (%)
2009 121.0 17.2 9.2 -36.1 12.8 1.42 - 11.1 -
2010f 160.0 26.5 14.2 54.4 8.3 1.22 0.42 14.8 1.21
2011f 184.0 32.2 17.3 21.5 6.8 1.05 Net cash 15.5 1.47
2012f 211.6 40.4 21.7 25.6 5.4 0.9 Net cash 16.5 1.84
Issued Capital (m shares) 186.0 Major shareholder (%)
Market Capitalisation (RMm) 219.5 Dato’ Low Eng Hock 52.5
Main Market Listing /Non-Trustee Stock/Syariah Approved Stock By The SC
Valuations based on estimated fair value of RM1.18/share

X Ivory’s primary business is property development. All of its completed LISTING DETAILS
projects with a total GDV of RM675m have been in Penang (see Table 2), Listing Bursa Malaysia Main
and we understand that it is planning to further expand its focus in the Market
state as well as in a new market i.e. Tanjung Malim, Perak with a Listing Date 28 July 2010

combined GDV of RM2.7bn (see Tables 3 and 4) while also keeping a Sector Property

lookout for landbanks in the Klang Valley area. Tax Resident Malaysia
Public Issue 1) 9.3m shares to the
X Ivory has built a reputation as a premier residential developer in Penang
Of Malaysian public
with projects such as its Moonlight Bay (94% completed, GDV : RM200m)
2) 1.0m shares to
which comprises 70 units of 4-storey luxury villas and 20 units of condo- employees and
villas. More than 90% of the villas have been sold at an average price of business associates
RM2m/unit. 3) 34.0m shares to
X One of Ivory’s strengths is its ability to handle challenging approval selected investors
via private
processes for unique and extraordinary development designs, and also
placement
shorten the approval process. The ability is due to Ivory having a 4) 0.6m to Bumiputera
dedicated and specialised authorities liaison team to solve and monitor all investors approved
authorities liaison matters. It normally takes Ivory 6 months as compared by MITI via private
with 12 months or more for other developers, taking into account the level placement
Offer For Sale 1) 16.2m Bumiputera
of complexity of the project. We understand that the state of Penang is
Of investors approved
one of the states in Malaysia with the toughest and most stringent by MITI
guidelines for development application and approval.
MAJOR SUBSIDIARIES
X In 2H2010, we believe news flow will take precedence over fundamentals
Ivory Associates 100%
in driving the share price performance of property developers. Positive
Ivory Gleneary 100%
news flow is likely to come from: (1) The formal awards of Federal land
Ivory Square 100%
parcels (see Table 5) to “master developers” and the subsequent farming
out of the sub-divided smaller land parcels to various developers; and (2) MANAGEMENT FORECAST
The increased interest and hence prices in land and properties including FY12/10
residential, commercial and industrial in Iskandar Malaysia on expectation Net Earnings (RMm) 33.9
of rising investment and hence economic activities in the growth corridor, Net EPS (sen) 18.2
on the back of the improving ties between Malaysia and Singapore. Net DPS (sen) na
X On the flip side of the coin, share prices of developers may take a beating
if the International Financial Reporting Interpretations Committee 15
(IFRIC 15) is to be adopted. Basically, IFRIC only allows property
development income to be recognised on a “completion” basis, vis-à-vis
“progress” previously. This will result in high earnings volatility due to
lumpy profit recognition. Naturally, developers with a large portfolio of
projects (including township development) and investment properties
(such as SP Setia, IJM Land, Mah Sing and SunCity) will be less affected, Joshua Ng
while project-driven developers especially those in the high-rise and (603) 92802641
joshuang@rhb.com.my
commercial segments (such as Ivory, Glomac, YNHP, Sunrise and Hunza)
will take the full blunt.

Please read important disclosures at the end of this report.

A comprehensive range of market research reports by award-winning economists and analysts are exclusively
available for download from www.rhbinvest.com
27 July 2010

Table 2. Completed Projects


Approx.
Land area
Project Units Type Location (acres) GDV (RMm)
Tanjung Tokong,
Tanjung Park 299 Condominiums and townhouses Penang Island 7.7 103.5
Tanjung Tokong,
Seri Taman Tanjung 228 Apartments Penang Island 1.0 10.4
Bukit Gambier,
Palace Hill 40 Bungalows and Semi-D's Penang Island 38.7
Condominiums, commercial Bukit Gambier,
Plaza Ivory 366 spaces and retail shops Penang Island 9.2 87.0
Batu Uban, Penang
The View Twin Towers 164 Condominiums Island 2.6 109.5
Penang Times Square (Phase Serviced Residence and George Town,
1) 622 commercial/retail spaces Penang Island 13.0 (total) 325.8
Total 674.9

Table 3. Ongoing Projects


Approx.
Land area GDV
Project Units Type Location (acres) (RMm)
Batu Uban, Penang
Zen @ The View 7 Bungalows Island 1.0 15.4
Penang Times Square Serviced Residence and George Town,
(Phase 2) 484 commercial/retail spaces Penang Island 13.0 (total) 308.4
Batu Feringgi,
Moonlight Bay 90 Villas and condo villas Penang Island 13.8 200.0
Batu Feringgi,
Island Resort Phase 2 281 Condominiums and villas Penang Island 193.0
Batu Feringgi,
Island Resort Phase 3 22 Boutique bungalows Penang Island 20.2 65.5
Total 782.3

Table 4. Future Projects


Expected
Approx. Land GDV commencement
Project Type Location area (acres) (RMm) and completion
Shopping
complex and
Penang Times Square super George Town, Penang
(Phase 3) condominiums Island 13.0 (total) 469.9 2011-2015
Hotel and
Penang Times Square commercial George Town, Penang
(Phase 4) mall Island 13.0 (total) 155.0 2011-2015
Condominiums
and
apartments,
retail outlets
and
Mount Erskine commercial Mount Erskine, Penang
Development area Island 24.0 418.0 2011-2015
Bungalow,
semi-D's,
terrace house,
shop offices
and
commercial Bukit Mertajam Town
Aston Villa mall Center, Penang 16.0 110.0 2009-2015
Batu Feringgi, Penang
Island Resort (Phase 4) Condominiums Island 4.5 121.1 2013-2016
Condominiums,
shopping
complex, and
tourist
information Tanjung Tokong, Penang
City Mall center Island 2.0 270.0 2011-2014
Homestead
bungalows,
bungalows,
semi-d's,
Ivory Eco Park @ terrace houses,
Tanjung Malim commercial Tanjung Malim, Perak 498.0 420.0 2013-2016
Total 1964.0

IVORY 2 PROPERTIES
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27 July 2010

Table 5: Federal Land To Be Awarded


Land Area GDV Potential Master Developer(s)
(acres) (RMm)
Matrade 65 15,000 Naza TTDI (Awarded)
Rubber Research Institute, Sungai Buloh 3,300 10,000 EPF, MRCB
Royal Malaysian Air Force, Sungai Besi 400 Multi-billion 1Malaysia Development Bhd (1MDB), Qatar
Investment Authority
Jalan Cochrane 150 Multi-billion To be auctioned
Dataran Perdana, Jalan Davis 85 Multi-billion 1MDB, Mubadala
Batu Cantonment army base, Jalan Ipoh, KL 245 - 1MDB, LTAT (Boustead)
KLCC, Jalan Ampang & U-Thant vicinity - - MRCB
Source: Various news reports

Table 6. RNAV Calculation


Total GDV Outstanding GDV RNAV*
On-going Projects (RMm) (RMm) (RM/share)
Penang Times Square Phase 2 307.4 87.6 3.6
Island Resort (Phase 2&3) 259.0 146.1 16.4
Aston Villa 62.4 34.5 3.6

Future projects
Penang Times Square Phase 3 469.6 469.6 64.2
Penang Times Square Phase 4 155.0 155.0 19.3
Aston Villa Phase 2 1.4 1.4 0.2
Aston Villa Phase 3 33.6 33.6 4.4
Ivory Eco Park 420.0 420.0 45.4
Mount Erskine 204.1 204.1 29.3
City Mall 161.8 161.8 23.1
Island Resort Phase 2 89.0 89.0 10.5
Total 2163.3 2163.3 219.8

No. of Shares 186.0


1.18
*NPV of net profit, discounted back at 10%

X At the helm of the company is CEO and managing director Dato’ Low Eng Hock who has had
approximately 25 years of experience in property development and building and construction. He has
a Bachelor’s Degree in Engineering with Distinction from Concordia University, Canada.

X At the offer price of RM1.00, the IPO will raise RM44.9m gross proceeds (see Table 7 for IPO
proceeds utilisation). Post-IPO, the company is estimated to be in a net gearing of 42%.

X We project Ivory’s net profits to grow at 54.4% and 21.5% in FY10-11 driven largely by: 1) Penang
Times Square; 2) Mount Erskine; and 3) Island Resort. Indicative fair value is RM1.18 based on
RNAV (see Table 6).

Table 7: Utilisation Of Gross IPO Proceeds


RM m
Repayment of bank borrowings 10.0
Working capital 31.5
Listing expenses 3.4
Total 44.9

IVORY 3 PROPERTIES

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available for download from www.rhbinvest.com
27 July 2010

Table 8 :
FYE Dec (RMm) 2009 2010f 2011f 2012f

Revenue 121.0 160.0 184.0 211.6

COGS -71.7 -96.0 -110.4 -127.0

GP 49.3 64.0 73.6 84.6

Selling exp -0.9 -1.5 -1.5 -1.5

Admin exp -24.3 -25.0 -25.0 -25.0

Other OPEX 0.0 0.0 0.0 0.0

Other Op inc 4.3 2.0 0.0 0.0

Operating profit 28.5 39.5 47.1 58.1

Finance cost -4.5 -3.0 -3.0 -3.0

PBT before share of assc 24.0 36.5 44.1 55.1

Share of assc 0.9 0.9 0.9 0.9

PBT 24.9 37.4 45.0 56.0

Tax -7.8 -10.9 -12.8 -15.6

PAT 17.2 26.5 32.2 40.4

% change -36.1 54.4 21.5 25.6

EPS 9.2 14.2 17.3 21.7

% change -36.1 54.4 21.5 25.6

PER 12.8 8.3 6.8 5.4

No. of shares 186.0 186.0 186.0 186.0

EPS 9.2 14.2 17.3 21.7

Gross EPS 13.4 20.1 24.2 30.1

Net dividend (sen) 1.42 1.73 2.17

Net dividend yield 1.21 1.47 1.84

Tax Rate -31.2 -29.1 -28.4 -27.8

Valuations based on RM1.18/share

IVORY 4 PROPERTIES

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available for download from www.rhbinvest.com
27 July 2010

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
Berhad (previously known as RHB Sakura Merchant Bankers Berhad). It is for distribution only under such circumstances as may be permitted by applicable
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and may differ or be contrary to opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This
report is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything
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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or
more over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to
take on higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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securities, subject to the duties of confidentiality, will be made available upon request.

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the actions of third parties in this respect.

IVORY 5 PROPERTIES

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27 July 2010

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MALAYSIA
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Director

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Additional information on recommended securities, subject to the duties of confidentiality, will be made available upon
request.

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