Results

• Within expectations: TILB’s FY14 reported PATAMI of RM102.7m came in within expectations, accounting for 101.2% and 97.5% of HLIB’s and consensus’ full year forecasts.

Deviations

• None.

Dividends

• Declared single-tier interim dividend of 3 sen/share, totalling FY14 dividend of 6 sen/share. This represents dividend payout and yield of 23.8% and 3.3%, respectively.

Highlights

• Yoy: Although TILB experienced decline in revenue, management highlighted that all property development projects were on track and progress as scheduled.

• PATAMI shows strong growth of 19.9% largely due to elimination of MI after completing the acquisitions of the remaining stakes of its two subsidiaries in Nov 2013 (Palmington Sdn Bhd and Tambun Indah Development Sdn Bhd).

• Qoq: Lower revenue (-5.7% qoq) was due to the decline in recognition as a few projects have been completed during the year. However, bottomline was higher (+3.6% qoq) attributable to fair value adjustment on investment properties of circa RM2.6m and lower marketing and admin expenses.

• Prospects for FY14: TILB have achieved an average take-up rate of 75.7% for its on-going projects, with total GDV of RM1.2bn. Unbilled sales to date stands at RM424.4m, representing 0.91x of the group’s FY14 total revenue.

Risks

• Slowdown in mainland Penang property market (albeit unlikely), as it is 100% concentrated in Penang and the affordable segment.

Forecasts

• Unchanged.

Rating

BUY

Positives

• (1) Strong beneficiary of rising land prices in Penang mainland; (2) Pearl City Flagship will provide the main earnings driver; (3) Undemanding valuations – still trading at 5.9 FY15E P/E; (4) Decent 6.7% DY (FY15E); and (5) Potential for more RNAV-accretive landbanking exercises.

Negatives

• (1) High project concentration in Penang.

Valuation

• TP remained unchanged at RM2.14 (based on unchanged 10% discount to RNAV), which values TILB at 6.9x FY15E P/E, vs. 10-18x for mid/large cap property developers.
• Maintain BUY on the stock.

Source: Hong Leong Investment Bank Research - 13 Feb 2015