• Maintain Buy with a revised target price (TP: RM0.89). Simeprop's FY23 revenue surged to RM3,436.9mn, marking a 35.3% YoY increase, which exceeded our estimation by 120.5%. This was primarily supported by a sustainable unbilled sales pipeline, strong sales contributions from residential and industrial products, as well as increased on-site development activities in townships such as Bandar Bukit Raja, Nilai Impian, Serenia City, Elmina Business Park, and Hamilton City. Simeprop's FY23 core net profit surged by +30.8% YoY to RM439.3mn, exceeding our expectations by 135.5%. The deviation from our expectations was also reinforced by contributions from non-core land monetisation activities totalling approximately RM400mn. Maintain a BUY call with a higher TP of RM0.89 (from RM0.86), pegged at 0.6x P/B to FY24F BVPS of RM1.48. This implies a +0.6 Std. Dev. above its 5-yr historical average forward P/B of 0.5x.

• Key highlights. Simeprop’s 4QFY23 revenue fell to RM1012.7mn (-4% QoQ, +5.8% YoY) due to strong performance in the preceding quarter, driven by contributions from the sale of land in Negeri Sembilan and Kedah, as part of the group’s land monetisation strategy. However, excluding the impact of fair value losses on investment properties, core net profit rose to RM162.8mn (+8% QoQ, -2.6% YoY), driven by increased on-site development activities, coupled with higher progress from its integrated development townships.

• Earnings Revision. In light of the company's high new launches of RM3.9bn and sales targets of RM3bn in 2024, we have revised our FY24/FY25F earnings forecasts upwards by 13%/7%, resulting in projected profits after tax (PAT) of RM444mn/RM450mn for FY24F-25F (Table 2).

• Outlook. We anticipate Simeprop to sustain its positive earnings, buoyed by rising sales volumes, the launch of new property ventures, successful project completions, and favorable governmental policies and incentives. The company has revealed a sales target of RM3.0bn and intends to introduce projects valued at RM3.9bn in Gross Development Value (GDV) for FY2024.

Source: BIMB Securities Research - 26 Feb 2024