Investment Highlights

• We are maintaining our HOLD recommendation on Titijaya Land (Titijaya) with an unchanged fair value of RM0.32 based on a 50% discount to its RNAV (Exhibit 2). We made no changes to our FY20-22 net earnings forecasts.

• Titijaya registered an 1HFY20 net profit of RM5.1mil (-77.1%). Despite making up 28% of our full-year forecast, we reckon this to be in line with expectations, as we expect stronger earnings in 2HFY20. 1HFY20 revenue and net earnings tumbled by 31.3% and 75.1% YoY respectively due to the lower recognition and lower progress recognition from the completed H2O and Mizu projects.

• 1HFY20 revenue was mainly contributed by Neu Suites @3rdNvenue, The Shore @ Kota Kinabalu and The Riv @ Riveria City. Titjyaya chalked up new sales of RM117mil for the same period while unbilled sales of RM490mil provide good earnings visibility for the next 2–3 years.

• Financial leverage remained stable despite a higher net gearing of 24.0% as compared with 28.4% QoQ.

• Titijaya launched Seiring Residensi in August 2019, which is phase one of its Damaisuria township project. Consisting of four towers, Seiring Residensi offers units at sizes ranging from 668 sq ft to 972 sq ft, with up to four bedrooms. Developed over four phases, Damaisuria will have a total GDV of RM1.59bil, while the first phase Seiring Residensi will have a GDV of RM677mil.

• The company is also planning to launch Taman Seri Residensi, Klang Phase 3B (landed semi-D – GDV of RM38mil) by 2HFY6/20.

• For future development, Titijaya has a remaining landbank of 155 acres with a combined GDV of about RM9.4bil, located mainly in the Klang Valley. The projects planned for the remaining landbank are Emporia @ Glemnarie (mixed development – GDV of RM1.51bil); Klang Sentral (serviced apartment – GDV of RM700mil); Damai Suria (township – GDV of RM1.48bil); Odeon @ Jalan TAR, KL (serviced apartment & retail mall – GDV of RM1.17bil); 3rdNvenue Phases 3,4 & retail (hig-hrise mixed – GDV of RM997mil); Taman Seri Residensi Phases 3A, 4 & Selangorku (landed residential – GDV of RM161mil); Riveria City @ KL Sentral Phases 2, 3 & retail (integrated development – GDV of RM1.1bil); and Areca @ Batu Maung, Penang (mixed development – GDV of RM2.52bil).

• Management indicated that several ongoing projects have progressed beyond their initial stages of construction, therefore the coming quarters should see a stronger performance. We made no changes to our FY20–FY22 numbers at this juncture. Maintain HOLD.

Source: AmInvest Research - 2 Mar 2020