Period 1Q13
Actual vs. Expectations
1Q13 core earnings of RM6.0m is
considered largely within expectations, although it made up 38% of our
estimates. We expect a weaker remaining 9 months as the group is lacking sizeable
project launches.
Dividends None,
as expected
Key Results Highlights
1Q13 sales of RM27m (+4% YoY; -23% QoQ) made
up 32% of our FY13E sales target of RM83m; however, given the lack of launches,
we deem this as within expectations. Sales were mainly driven by Gurney Paragon
Condo (GPC) (44%), Bandar Putra Bertam township (BPB) Phase 3A (41%) and
Infinity (15%).
YoY, 1Q13 core
earnings fell 20% given a 19% drop in revenue given less sales and billings.
The group was reliant on the already completed GPC and Infinity. Net gearing
has also increased to 0.3x from near net cash position due to GP Mall works.
QoQ, 1Q13 reported
earnings fell 92% because of the previous quarter’s non-cash fair value gains
arising from GP Mall. Stripping-off the gains, core net profit fell 30% due to proportionately
higher overall costs (+9%) compared to revenue stream, which is likely to arise
from GP mall.
Outlook Over FY13, we believe the group will continue
to focus on completing its GP Mall works and may hold back sizeable project
launches (e.g. Alila 2). Soon, Hunza will be launching 173 units of double-storey
terraces (GDV RM63m) in BPB though we expect project take-ups to be slow since
BPB Phase 3A (semi-detached) has only achieved 52% take-up since the launch in
4Q12.
Change to Forecasts Maintain FY12-13E earnings. Unbilled sales arising
from BPB Phase 3 amounted to RM13m or close to 1 year’s visibility.
Rating Maintain UNDERPERFORM
The stock is trading
at trough 0.5x Fwd PBV. However, we see no further upside to our TP due to declining
profit trends and lack of sizeable new launches in the immediate term.
Valuation Maintain TP of RM1.50 on 53%* discount to our FD
SoP RNAV of RM3.20.
Risks Sector
risks, including negative policies.
Source: Kenanga
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