Results

1Q13 PAT rose 290% yoy to RM211.084m, making up 40% and 39% of HLIB and consensus estimates respectively.

Deviations

We deem the 1Q results in-line, given that the revenue contribution from land sales for Commercial North @ Puteri Harbour booked in 1Q was RM300m, in-line with our RM310m estimate for FY13.

Moreover, we understand at the only other likely land sale to be book in 4Q would be the RM67m sale of Plot A to the Ascendas JV.

Dividends

None

Highlights

Land sales… 1Q results was distorted by land sales for Commercial North, which contributed RM300m to revenue and RM135m to PBT. On a normalised basis, 1Q13 core PATAMI made up just 6% of HLIB forecast due to weak sales in FY12 (more than 30% short of the FY12 sales target of RM3.0bn).

Decent sales in 1Q… ULHB chalked up RM956m in new domestic sales (mainly driven by Teega in Puteri Harbour, with SPA conversion estimated at RM490m in 1Q), in addition to the RM431m sales from Quintet in Canada, which we understand is not expected to contribute to earnings in future.

Upcoming launches… With the healthy sales in 1Q, manage is confident of achieving its RM3.0bn sales target for FY13. Upcoming key launches include CS1 (RM 1.4bn GDV, launching in October), Bangi (RM120m GDV, also launching in October), MK22 (RM700m GDV, launching in 3Q), and the various portions of Nusajaya (East Ledang, Idaman, and Nusabayu, with RM1.3bn combined GDV slated to launch in FY13).

Unbilled sales jumped 70% qoq to RM3.1bn in 1Q, thanks to SPA conversions from Teega.

Risks

• Nusajaya fails to achieve critical mass; failure to achieve RM3.0bn sales target; high-beta stock.

Forecasts

• Maintained.

Rating

SELL

• Positives: highly liquid proxy to property sector; large war-chest for landbank acquisitions; rich in newsflow.
• Negatives: Share price is highly news-driven; vulnerable to external slowdown; highest P/E multiple in the sector (>2x sector average).

Valuation

• Raise TP from RM2.06 to RM3.16 (no discount to RNAV).
• Given that ULHB now trades at 15% premium to RNAV, we downgrade to SELL.

Source: Hong Leong Investment Bank Research - 29 May 2013