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Tambun Indah Land Bhd looks ripe for an upturn after touching 93 sen on Jan 23. The counter appears to be heading towards 98 sen and RM1.07 in the near term.

The property developer has already rose 12% over the past year, hitting a high of RM1.11 versus a low of 79 sen. As such, reaching or surpassing the RM1.11 is something that is not too far off.

For one, the development that is catalysing Penang is the Penang Transport Masterplan Programme (PTMP), which will serve as a long-term catalyst, enhancing land value, stimulating economic activity, and driving housing demand in Penang.

Consequently, property developers holding landbank in Penang Island stand to gain long term from the enhanced road and public transport connectivity under the PTMP.

Analysts are also optimistic about Penang's residential property market, driven by the robust recovery of the medical and tourism sectors on Penang Island post-pandemic, coupled with the thriving industrial sector on Penang Island and the mainland.

While major property players are expected to benefit from the spillover effects of PTMP, there are those which will not benefit significantly due to their size and capabilities.

Tambun Indah, with a market cap of about RM400 million may not be on top of investors’ mind when looking at property counters. But it has a strong foothold in Penang and should be able to turn in some positive developments.

However, investor could be wary on its outlook given the slump in net profit and revenue in 3QY23.

The company posted a net profit of RM12.9 million in 3QFY23 compared with RM17.1 million a year ago while revenue fell to RM48.2 million versus RM65.6 million. It was dragged by lower revenue recognitions from projects that are close to completion and low number of new project launches.

The slump in margins is within our expectations where earnings experienced another decline. Weaker margins are expected to be evident in its books for the whole of 2023.

Revenue was mainly contributed by residential property developments in Pearl City, Simpang Ampat which accounted for 99.9% of the total revenue in the segment.

It recently launched an affordable low-cost housing project, namely Mutiara Indah in Simpang Ampat, Penang

Tambun Indah has 6 ongoing projects with a total GDV of close to RM500 million.

These projects achieved an average take-up rate of 79.7% and unbilled sales of RM81.8 million which should contribute positively to its earnings for the next two to three years.

Hoover, it is mindful of current and upcoming challenges in a rising interest rate environment, coupled with an escalation in construction cost.

Tambun Indah will continue to exercise prudence in new project launches, with a focus on mid-market landed projects.

Investors may like the counter for those reasons and being a Penang-based property developer, Tambun Indah may stand to benefit from higher demand for property.