This article first appeared in The Edge Financial Daily, on December 11, 2015.

IFCA MSC Bhd
(Dec 10, RM1)
Maintain add with an unchanged target price (TP) of RM1.80: IFCA MSC Bhd finally launched its transactional portal, property365.my (P365), yesterday. Some of the property developers that launched some of their projects on P365 include Symphony Life Bhd, Macrolink International Land and the BSG Property Group. We currently see seven new property launches for Symphony Life on P365.

There were seven new projects listed on property365.my and we estimate launches of around RM3 billion in new gross development value. We understand that management is currently negotiating with a few major developers on putting their new launches on P365. We would not be surprised over the next few weeks to see more new launches on P365.

We believe that P365 is a win-win proposition for all parties. For developers, P365 opens up the market for new potential customers. For property agents, it offers an abundant supply of units for sale. For buyers, searching for and booking new property launches is easy, convenient and transparent.

IFCA can get a commission of between 1% and 5% on the selling price of a property unit. The company gets the commission only when the sale and purchase agreement is signed. We have not assumed any potential earnings from P365.

Assuming the company can sell RM2 billion sales on P365 in 2016 and assuming an average 2% commission from sales, this could contribute RM40 million in revenue. Assuming a 50% to 60% net profit margin, this could boost FY16 net profit by RM20 million to RM24 million, or 52% to 63% 2016 earnings per share (EPS) enhancement.

We maintain our EPS and TP, based on an unchanged 2017 21 times price-earnings ratio, in line with peers. Potential catalysts include the successful launch of P365 and stronger-than expected China sales. — CIMB Research, Dec 10