KL Trader Investment Research Articles

Author: kltrader   |   Latest post: Wed, 5 Aug 2020, 9:21 AM


Plenitude Berhad - 3Q20 – Hotel Operations Hit by Covid-19, Offset by Better Performance in Property Division

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3Q20 Revenue and PBT up while PAT down due to higher tax

Plenitude 3Q20 reported higher revenue of RM76.7m (yoy:+107.7%, qoq:+41.7%) and PBT of RM11.6m (yoy:+11.3%, qoq:+41%) however PAT lower at RM3.4m (yoy:-46.5%. qoq:-11.3%). 9M cumulative revenue, PBT and PAT account for 92.6%,122% and 56.3% of our full year FY20F estimate respectively. Revenue and PBT beats while PAT disappoint mainly due to higher effective tax rate as certain expenses were disallowed as deductions for tax purposes and deferred tax assets not recognized,

Property Development division surprise albeit weak sentiment remains

Property division surprise with better than expected performance, revenue increase to RM64.9m (yoy:+175%, qoq+102%) and operating profit increase to RM20.8m (yoy:+72.3%, qoq:+88.1%). Higher revenue recognition due to delivery of vacant possession and better sales from new property launches and completed properties in Johor and Selangor via its intensified sales and marketing and initiatives.

Hotel division severely impacted by Covid-19 & MCO, downsize operation

Hotel division revenue decline to RM11.8m (yoy:-11.3%, qoq:-46.5%), newlyacquired hotel in Seoul contributed RM1.7m (qoq:-68.5%) while hotel in Malaysia contributed RM10.1m (yoy:-24.6%, qoq:-39.2%). The significant drop in revenue is due to Covid-19 and MCO imposed by Government. Hotel division registered operating loss of RM4.5m for the quarter, consequently the Group closed three hotels (Mercure Penang, Gurney Restort Hotel and Residences and Travelodge Ipoh) in April 20.

Prudent management and healthy balance sheet to weather storm, Maintain BUY with TP RM1.67

The outlook for property market and hospitality further dampens by Covid-19 nevertheless we believe the group able to weather the group given its prudent management, healthy balance sheet and liquidity with gearing ratio at 0.2x and cash ratio at 23.2x. The group is trading at undemanding valuation, P/B of 0.24x, we believe it has priced in the challenging business environment and outlook thus we maintained BUY recommendation with unchanged target price of RM1.67 based on P/B ratio of 0.4x of our estimate FY20F NTA.

Source: Mercury Research - 2 Jul 2020

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