Investment Highlights

• We are maintaining our HOLD recommendation on Titijaya Land (Titijaya) with an unchanged fair value of RM0.28 based on a 50% discount to its RNAV (Exhibit 2). We cut our FY20 and FY21 net profit forecasts by 21.4% and 6.7% respectively to reflect the timing of recognition. We keep our FY22 numbers unchanged.

• Titijaya's 9MFY20 net profit of RM7.1mil (-78.4%) came in below expectation at 65% of our full-year forecast. 9MFY20 revenue and net earnings declined by 46.2% and 78.4% YoY respectively due to lower progress recognition from the completed H2O, Mizu; and the impact of the movement control order (MCO).

• 9MFY20 revenue was mainly contributed by Neu Suites @3rdNvenue, The Shore @ Kota Kinabalu and The Riv @ Riveria City.

• Titijaya chalked up new sales of RM143mil for the same period while unbilled sales of RM470mil provide good earnings visibility for the next 2–3 years.

• Financial leverage remains stable with a lower net gearing of 23.0% as compared with 24.4% 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.

• Meanwhile in short to mid-term, Titijaya will remain prudent with fewer new launches and remain focused on developing affordable properties.

• 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 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 and retail (high-rise mixed – GDV of RM997mil); Taman Seri Residensi Phases 3A & 4 and Selangorku (landed residential – GDV of RM161mil); Riveria City @ KL Sentral Phases 2 & 3 and 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 the initial stage of construction, therefore the coming quarters should see a stronger performance. Maintain HOLD.

Source: AmInvest Research - 27 May 2020