A recent meeting with management revealed that the Group’s base target of RM2bn will be easily met, underpinned by recent en-bloc sales (Aurora serviced apartments for c.RM371m and Teega office for c.RM138m). Recall that 9MFY15 new sales achieved was c.RM1.2bn, and which would already be RM1.7bn if inclusive of the en-bloc sales. While no sales target and headline KPIs were given as yet, we believe that the Group should still be looking at launches worth c.RM1.0bn to RM2.0bn at least, and similar sales target of RM2bn to maintain its earnings. As for land disposal (c.RM300m sale value), the deal which was supposed to be concluded last year is now slated to be sealed by 1H2016. Maintain Outperform with TP of RM2.15 (30% discount to RNAV).

• New launches in FY16. We understand that main launches will still be primarily in the central region and overseas i.e. Australia. In Johor, we understand that it will focus on disposing the unsold inventories from Almas and Estuari. Based on our estimates, the unsold units from these two projects alone are c.RM1.1bn and hence agree that there’s no urgency to launch other comparable products in the current soft market. That said, the Group still has plans to unveil some projects, albeit smaller in size, which are mostly mid to low-end products such as an affordable apartment project in Gerbang Nusajaya (GDV c.RM62m) and Signature Residences (Phase 1, c.RM83m GDV, 110 units). Key launches in the Central region are new phases in Serene Heights and Solaris 3 (RM1.3bn total GDV), while for overseas projects, St Kilda (RM722m GDV) redevelopment in Melbourne might be unveiled by end-2016.
• Other updates. We understand that its land disposal deal in Puteri Harbour should be concluded by 1H2016, with c.RM300m proceeds expected. As for its JV with WCT, we understand that UEMS is doing the land conversion and master planning with the project expected to be launched by 2017. Also, the GDV is expected to be enhanced from the reported RM3bn earlier. We have stated in our previous report that the GDV/acre will be easily enhanced to c.7m/acre or potentially yielding GDV of RM4bn. Case in point is EcoWorld’s proposed township in Ijok which is said to have RM15bn in GDV for its 2,198 acres land or c.RM7m/acre. We understand that UEMS is exploring more land deals to increase its exposure in the Central region. Elsewhere, its JV to develop the RM3.5bn Motorsports City in Gerbang Nusajaya is expected to have a groundbreaking in May this year.

Source: PublicInvest Research - 11 Jan 2016