Period 3Q12 / 9M12
Actual vs. Expectations
9M12 core earnings** of RM230m is
above expectations, making 86% of street’s and 85% of ours. 9M12 sales hit a
record high of RM1.24b (+46% YoY), largely due to Horizon Offices en bloc sales
(3 blocks), Le Yuen, Vertical Office, Kencana Square and One@Bukit Ceylon.
Dividends None,
as expected.
Key Results Highlights YoY, 9M12 core earnings** was up 19% on higher
billings and sales from ongoing projects. Property pretax margins did slide by
4.5ppt to 39% as new projects with heavy infrastructure (e.g. Kencana Square)
has commenced; this was anticipated.
QoQ, 3Q12
core earnings** rose 51% to RM111m as the group completed sales of 2 blocks of
Horizon Office to LTH for RM204m. As a result, the group’s cash pile grew by 148% to RM340m and its net cash
positioned improved further to 0.15x.
Outlook Key
launches for the next 12-18 months amount to RM3.1b; Kencana Square@Glenmarie
(refer below), Scenaria/KiaraIV, Desa III, Desa II Phase 1 (Commercial), Desa
Green and Kerinchi SoHo. 4Q12 will see SPA sales from Desa Green (1st two blocks
almost fully booked) and Scenaria (preview this weekend).
Change to Forecasts Raise FY12E core earnings by 7% but lower FY13E
by 6%. We are bringing forward some of the project recognitions to FY12E due to
quicker than expected construction. Unbilled sales of RM0.8b provide 1 year
visibility.
Potential
earnings upgrade if there are more en bloc sales.
Rating Maintain
OUTPERFORM
Investors’
need for defensive havens will keep this stock on the radar given FY12-13E net
yields of 7.3%-6.2% which
is higher than
sizeable MREIT dividends yields
of 4.5%-5.5%.
Valuation Maintain
TP of RM2.30 based on 34% discount to our FD SoP RNAV of RM3.43. TP still
implies compelling FY12-13E yields of 5.5%-4.6%.
Risks Sector
risks, including negative policies and disappointing dividends.
Source: Kenanga
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