• MCT’s 2Q2018 (FYE: DEC 2018) core earnings more than doubled to RM37m driven by revenue contribution from the newly-launched Casawood project. Overall, 6-months FYEDec2018 core earnings exceeded our estimate at 139%.

• MCT expects to launch at least another 2 new projects at Tropicana Metropark and Tropicana Grande 2 in 2019.

• Maintain HOLD with an unchanged RM0.65 TP pegging 10x PE on 2019F EPS. While this is below the sector’s 5-year historical average of 12.0x, we think it is fair amidst the weak property market.

Core profits improved on newly-launched Casawood

2Q2018 (FYE: DEC) core profits surged yoy to more than double to RM37m driven by contribution from the newly-launched project, Casawood @ Cybersouth. The project was launched in May 2018 with current take up rate already at 52%. In contrast, most projects then were near completion in 2QFY18 (Oct-Dec 2017). Overall, the 6-month 2018 core earnings exceeded our estimates at 139%.

Stronger qoq performance

On qoq basis, revenue grew 45% to RM182m on the back of progress billing of existing development projects being recognised including Lakefront Residence Phase 2, Lakefront PRIMA and Belleveu @ Cybersouth. On the other hand, Greencasa @ Cybersouth project was completed and delivered in Oct 2018 followed by Lakefront Residence Phase 1 and Casa 2b @ Cybersouth in Nov 2018. There was no new launch during the quarter.

Looking forward to new project

MCT guided for at least 2 new project launches in 2019 including Tropicana Metropark and Tropicana Grande 2. Both projects are located in prime area with good accessibility. The proposed Tropicana Metropark entails the development of 1,400 units of serviced apartment worth RM570m. It is located within the vicinity of Subang Jaya and is linked to the newly-opened direct access to Federal Highway [ie. where the Batu 3 Toll was situated]. Meanwhile, Tropicana Grande 2 entails the development of 226 units of residential condominium worth RM265m. It is located within Tropicana Golf and Country Resort which is nearby to Surian MRT and Lembah Subang LRT.

HOLD with unchanged TP of RM0.65

Maintain HOLD with unchanged TP of RM0.65 pegging 10x P/E on 2019F EPS. While this is below the sector’s 5-year historical average of 12.0x, we think it is fair in view of the soft property market backdrop. On other hand, long term proposition remains, in view of: i) huge unbilled sales of more than RM1bn; ii) low net gearing of 0.02x and iii) most landbanks located in prime locations.

Source: BIMB Securities Research - 1 Mar 2019