Investment Highlights

• We are maintaining our BUY recommendation on Titijaya with a revised fair value of RM0.47 from RM0.48 based on a 40% discount to its RNAV (Exhibit 3).

• We cut FY19-21F forecasts by 7.4% and 8.7% and 1.6% to RM75.6mil and RM79.0mil respectively to reflect the timing of revenue recognition.

• Titijaya's 1QFY19 net profit of RM11.7mil (-1.9% YoY) came in below expectations at only 15.5% and 15.3% of our full-year forecast and full-year consensus estimates respectively. 1QFY19 revenue declined by 34.9% YoY due to lower recognition on new projects namely 3rdNvenue – New Suites, Park Residency and Riveria – Phase 1 as these projects are still at the early stage of construction. Nonetheless, we expect earnings to improve in the coming quarters on the back of stronger sales and good take-up rates.

• Meanwhile, the higher unbilled sales of RM380mil (QoQ: RM320mil) together with a slew of new launches in FY18- FY19 provide earnings visibility for the next 2 -3 years.

• Overall, Titijaya has lined up RM826mil of new launches (high-rise residential) over the immediate term, with the key selling points being: (1) affordability for units in phase 1 of Damai Suria @ Bukit Subang @RM300K-450K – GDV RM168mil); and (2) premium locations for units in Riveria, KL Sentral @ RM300K-500K – GDV RM320mil; and phase 2 of 3rdNvenue @ RM450K-RM1mil – GDV RM338mil.

• Currently, Titijaya’s has a total landbank of 208 acres, located mainly in the Klang Valley with a GDV of RM12.4bil, providing good earnings visibility and this will drive the company’s growth going forward.

• We continue to like Titijaya for: (1) its focus in the affordable high-rise residential segment in the Klang Valley; (2) its strong earnings visibility backed by unbilled sales of RM380mil; and (3) its ability to consistently secure new landbank at attractive prices via JVs with landowners, from both the public and private sectors.

Source: AmInvest Research - 3 Dec 2018