• Revised to Buy with a higher target price (TP: RM1.95). Lagenda's 1QFY24 revenue reached RM225.6mn, representing 18% of our full-year forecast and marking a 24.7% YoY increase. Additionally, core net profit surged by 9% YoY to RM42.7mn, in line with our expectations. This growth was driven by strong sales momentum and increasing construction progress from various projects, most notably Lagenda Teluk Intan, Lagenda Tropika, and Darulaman Lagenda. Given the encouraging performance, we revised our recommendation from HOLD to a BUY call with a higher TP of RM1.95 (up from RM1.71), pegged at 8.1x PER to fully diluted FY24F EPS of 24 sen.

• Key highlights. Although Lagenda’s revenue marginally fell to RM225.6mn (-9.1% QoQ) due to slower revenue recognition from projects such as Lagenda Tropika, Lagenda Teluk Intan Phase 2, and BBSAP Phase 4A, which are nearing completion, we remain positive on its long-term prospects. Newly launched projects, namely Lagenda Suria Phase 1A and Lagenda Aman, have begun contributing gradually to the revenue stream as they are still in the early stages. Notably, core net profit increased slightly by 2.1% QoQ to RM42.7mn, despite a reduction in property development activity and the elimination of RM23.3mn in dividend income declared by a subsidiary under intra-group transactions.

• Earnings Revision. No revision.

• Outlook. Anticipating sustained positive earnings for Lagenda, we attribute this to the forthcoming growth from new launches, totaling more than 8,000 units across Perak, Johor, Selangor, Pahang, and Kedah. This represents a significant increase of over 100% compared to 2023's launches. In 1QFY24, the company recorded confirmed sales of RM222.6mn, primarily driven by Lagenda Suria in Johor and the recently launched Lagenda Aman in Perak. Additionally, bookings reached RM230.7mn, indicating a robust pipeline for future sales conversions. Revenue visibility for 2024 is bolstered by unbilled sales of RM633.7mn, expected to materialize throughout the year as construction activities escalate across various projects. Notably, the company boasts a 5,310-acre landbank with an outstanding GDV of approximately RM14.8bn.

Source: BIMB Securities Research - 28 May 2024