Period 3Q12
/ 9M12
Actual vs. Expectations
9M12 net profit of RM247m was below expectations,
making up 67% of street and 66% of ours. This is likely due to softer 9M12
sales achieved of RM1.24b (-22% YoY) vs. their initial FY12E sales target of
RM3b (refer overleaf).
Dividends None
as expected.
Key Results Highlights
YoY, 9M12 net profit grew 53% YoY on the back of
stronger billings arising from SummerSuites, MK28, Nusajaya projects (Nusa
Idaman, East Ledang, Nusa Bayu. EBIT margins rose by 3.7ppt to 23.1% given
higher project margin mix, particularly arising from the Klang Valley projects.
Furthermore, the group is enjoying stronger Horizon Hills sales, resulting in
115% increase in associates/JCE.
QoQ, 3Q12 pretax
profit fell by 16% largely due to lower land sales recognition vs 2Q12.
Outlook Management guides a lower FY12E sales target of
RM2.0b (-9% YoY), meaning 4Q12 must book in RM800m sales. No guidance yet for
FY13E sales target, although the new project launches could amount to GDV of
RM4.5b.
Change to Forecasts
Reducing FY12-13E net profit by 11%-13% as we lower
FY12-13E sales by 26%-18% to RM2.0bRM2.7b (refer overleaf).
Rating Maintain MARKET PERFORM
Valuation Increasing
TP to RM2.28 (RM2.07 previously) based on lower 33%* discount (39% previously) to
FD SoP RNAV of RM3.38.
Although earnings and
sales have disappointed, we are expecting strong news flows over FY13 (e.g.
Autocity@Gerbang Nusajaya, more tie-ups with Singaporean or foreign developers
in Nusajaya, Gerbang Nusajaya to get Coastal Highway connection, news on
Singapore-Johor MRT). UEMLAND is a Johor property market proxy, which we are
bullish on.
However, investors
should remain nimble given that near term. Negative headwinds could be potential
exclusion from the FBMKLCI and upcoming RCPS redemption of RM400m cash (vs. their
current cash pile of RM575m and net gearing of 0.1x) if the share price is at
most RM2.30.
Risks Unable
to meet it sales target. An up-cycle in Singapore’s property sector. GE and
sector risks, including negative policies.
Source: Kenanga
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