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PublicInvest Research

Author: PublicInvest   |   Latest post: Wed, 19 Jun 2019, 11:29 AM

 

Eastern & Oriental Berhad - RM1.5bn Property Launches Planned

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Eastern & Oriental (E&O) registered 4QFY19 net profit of RM38.2m (+16.3% YoY, NM QoQ) primarily driven by sales of inventory and billings from its reclamation works for STP 2A. For FY19, the Group accumulated net profit of RM61.9m (-34.3% YoY) which was below our and consensus full year estimates as some of the reclamation billings were carried forward into FY20. Sales achieved in FY19 were weak at RM331m, with unbilled sales at RM61.3m due to absence of property launches. We understand that it still has RM406m revenue outstanding to be billed to KWAP for the STP2 land sale. Inventory monetization is progressing well as the Group successfully reduced its inventory from RM456.6m in FY17 to RM216.1m currently. As for pipeline projects, it is still planning to launch projects worth RM1.5bn in the next 2 years to replenish the depleting unbilled sales. All told, we maintain our Neutral call and RM1.00 TP, pegged at c.75% discount to RNAV.

  • STP2A reclamation is 87% completed. We understand that the reclamation works for STP2A is progressing well with the island currently 87% completed and Gurney Wharf 70% completed. The CCC to be handed over in September 2019. The plan is to launch the maiden project in STP2A by mid-2020. To recap, the initial phase of STP2A is said to have a GDV of c.RM380m comprising 400 units of service apartments (600-1,200sf) and 16-20 retail lots. As for other new launches, the Group is still targeting to launch several new projects totaling c.RM1.5bn in the next 24 months which, among others, include 503 units of serviced apartments at the intersection of Jalan Conlay and Jalan Kia Peng — E&O’s second joint-venture project with the subsidiary of Japanese conglomerate Mitsui Fudosan — with an estimated gross development value (GDV) of RM900m, The Peak residential development in Damansara Heights (GDV RM278m).

Source: PublicInvest Research - 27 May 2019

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