Period 2Q12
/ 1H12
Actual vs. Expectations
The 1H12 net profit
of RM120m was within the consensus but slightly above our expectations, making
up 55% of the street’s FY12E earnings of RM220m and 58% of our RM207m. Although
the 1H12 revenue of RM913m met our expectations (50% of FY12E), other/interest
income was much higher than anticipated.
Dividends None
as expected.
Key Results Highlights
YoY, the 1H12 bottom
line grew 42% on the back of strong billings (Kinrara Residence, Garden
Residence, M-Suites, M-City, townships, iParc projects, etc.). The property
operating margin remained stable at 20.1%. The group’s overall operating margin
expansion by +1.8ppt to 18.7% was largely due to a stronger other income of
RM12.8m (1H11: RM0.9m) due to better rental income from Southgate/Icon@Jln Tun
Razak. We understand that Southgate and Icon’s occupancy rates are at 90% and
77%.
QoQ, the 2Q12 net
profit was flat at RM60m with the revenue being flat as well.
The 1H12 sales of
RM1.29b has met ours and the company’s FY12E target of RNM2.40b and RM2.50b
respectively. The major drivers for the sales are Kinrara Residence, M City,
Southbay City, Icon City and Johor townships.
Outlook The
group is still awaiting the Estate Land Board approval for its acquisition of
412.4ac in Bandar Baru Bangi. We believe this will take place towards end FY12
to early FY13.
Change to Forecasts
We adjusted just
slightly our FY12-13E net profits to RM209m-RM268m, based on sales targets of RM2.4b-RM2.9b.
Basically, we revised up the other income resulting in < +1% adjustment above.
The unbilled sales of RM2.69b provide 1.5 years of visibility.
Rating Downgrade to MARKET PERFORM
Although our TP
provides a <3% total return, we are only downgrading the stock to MARKET PERFORM.
We are reassessing our calls/TP for developers under our coverage in a likely upcoming
pre-Budget sector report, which will address our views/concerns.
Valuation Maintain TP of RM2.23 based on a 35%* discount
to our FD SoP RNAV of RM3.42.
Risks Unable
to meet sales targets. This will be more impactful on developers with a higher
net gearing. Sector risks, including negative policies
Source: Kenanga
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