Hunza’s 9MFY12 results came in above our expectations, with
its 9MFY12 net profit accounting for
about 86.7% of our FY12 forecast. This outperformance was due to higher-than-expected
revenue and margins, largely attributable to
the higher average selling prices (ASP) for the completed units of
Gurney Paragon Condominium. Nevertheless, due to re-allocation
of resources, we are discontinuing
our coverage on Hunza with a Not Rated recommendation. Our previous call
was Neutral with a FV of RM1.67, based on 0.65x FY12 P/NTA.
Above projections. Hunza recorded a net profit
of RM27.5m for 9MFY12, which constituted about 86.7% of our FY12 forecast. This
commendable performance was attributed to the higher-than-expected revenue
(~83.5% of our FY12 revenue forecast) and margins, thanks largely to higher
ASPs for the completed units of Gurney Paragon Condominium. However, revenue
was down 34.3% y-o-y due to lower unbilled sales as the company is focusing on
the construction of its own investment property known as Gurney Paragon Retail
Mall and Office Tower. Nevertheless, Hunza’s core net profit declined by only
16.5% y-o-y, mitigated by the higher margins as the EBIT margin jumped to 29.4%
for 9MFY12 compared with 22.7% in the same period last year.
Discontinuing
coverage. Despite the better-than-expected results, we are discontinuing
our coverage on Hunza with a Not Rated recommendation due to the reallocation
of resources. Our previous recommendation on Hunza was Neutral with a FV of
RM1.67, based on 0.65x FY12 P/NTA.
Source: OSK
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