• Revised to lower target price (TP: RM1.48). Lagenda's 1HFY24 revenue reached RM471.4mn, representing 37% of our full-year forecast, marking a 24.9% YoY increase. Additionally, core net profit surged by 25.9% YoY to RM91.1mn, which is 39% below our full-year expectations and in-line with 45% of the consensus. Despite this, the growth was driven by newly launched projects and contributions from the construction segment as work progress increased. We maintain our recommendation of a BUY call with a lower TP of RM1.48 (down from RM1.95), pegged at 8.1x PER to rollover fully diluted FY25F EPS of 18sen.

• Key highlights. Lagenda's revenue increased to RM245.83mn, up 9% QoQ, and its core net profit rose by 13.3% QoQ to RM48.4mn. This growth was attributed to the launch of new projects such as Darulaman Lagenda Phase 3A, Lagenda Suria Phase 1A, and Lagenda Aman, as well as contributions from ongoing construction projects like Lagenda Tropika, Lagenda Teluk Intan Phase 3A, and Darulaman Lagenda Phases 1 and 2. The company also declared a single-tier first interim dividend of 3sen for 2QFY24. This results in a total DPS of 3sen, with a yield of 2.34%, representing a 72% payout ratio for FY24.

• Earnings Revision. Due to our overestimations of the impact of new development launches and sales targets for the 1HFY24, we have adjusted our earnings projections for FY24/FY25/FY26 downward by 14%/17%/19%, respectively. This revision leads to anticipated core net profits of RM199.3mn/RM212.7mn/RM223.7mn for FY24F-FY26F (refer to Table 2).

• Outlook. We foresee ongoing positive outlook for Lagenda, primarily due to the anticipated surge in revenue from upcoming project launches especially in 2HFY24, which will introduce over 8,000 new units across Perak, Johor, Selangor, Pahang, and Kedah. This represents a significant expansion, more than doubling the number of launches from 2023. During the 2QFY24, Lagenda achieved an unprecedented milestone, securing confirmed sales amounting to RM297.1mn. Additionally, the company's sales for the first six months of 2024 reached RM519.76mn, marking a 2.5% increase from the corresponding period in 2023. The company is poised to maintain its upward momentum with several new projects scheduled for launch in the latter part of the year. As of the end of June 2024, Lagenda reported an unbilled sales and bookings totalling of RM743.47mn and RM542.73mn respectively, indicating strong customer engagement with its property offerings.

Source: BIMB Securities Research - 20 Aug 2024