Period 9M12
Actual vs. Expectations
9M12 core net profit of RM27.4m exceeded our expectations,
making up 94% of our FY12E core earnings of RM29.2m. Gurney Paragon Condo (GPC)
take-up rates improved faster than our estimate at 89% vs. last quarter’s 77%.
We reckon the renewed interest in the project could be due to a small portion
of Gurney Paragon Mall (GPM) being operational already, with the entire mall
about 44% completed to date.
Dividends None as expected.
Key Results Highlights
YoY, the 9M12 reported earnings of RM27.5m was 51% lower due
to 9M11 recognition of RM22.1m in positive fair value adjustments. Since there
are no new major project launches over the last three years, 9M12 core earnings
declined 19% while sales softened by 7% to RM91.3m.
QoQ, 3Q12 core earnings of RM13.0m grew 88% on the back of
the sale of completed GPC (i.e. immediate/full recognition), hence we observe 3Q12
property operating margins having surged 18.5ppt to 50.4%. GPC was the only
contributor to 3Q12 sales of RM40m (+58% QoQ).
3Q12 net gearing has increased substantially due to GPM
construction at 0.31x from 3Q11’s 0.05x.
Outlook Launched Bandar Putra Bertam (BPB) township Phase
3 semi-detached in May with a GDV of RM49m after a long lull period. Other
upcoming BPB launches are terraces (GDV: RM57m).
However, this is a bread and butter product which will not
provide the group strong earnings excitement. We still anticipate the launch of
Alila 2 (GDV: RM300m) in the short to medium term.
Change to Forecasts
Raising FY12E core earnings by 17% to RM34.2m but lowering
our FY13E core net profit by 3% to RM21.3m (see below).
Rating MAINTAIN UNDERPERFORM
Declining FY12-13E core earnings trend and lacking of new
launches will keep the stock under the investors’ radar.
Valuation No changes to our TP of RM1.23 based on a
30% discount* to our FD SoP RNAV of RM1.76.
Risks Sector risks, including negative policies.
Lack of new launches and underperformance of GPM.
Source: Kenanga
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