Results

• Above Expectations: Reported FY14 PATAMI of RM480m came in above expectations, accounting for only 115% and 41% of ours and consensus’ estimates, respectively.

Deviations

• Lower-than-expected revenue from property development; offset by

• Lower-than-expected effective tax rate.

Dividends

• Declared first and final dividend of 3 sen/share (FY13: 4 sen/share), representing payout and yield of 50.0% and 2.2%, respectively.

Highlights

• FY14 revenue growth was mainly due to the land sale revenue (RM882m vs. RM802m in FY13) recognised in Gerbang Nusajaya of which amounted to RM771m in 4QFY14 alone.

• FY14 sales. UEMS achieved RM2.4bn sales, ahead of its target of RM2bn. However, management continued to guide (during conference call) RM2bn sales target for FY15. Further information would be shared during analyst briefing in mid-March 2015.

• The major contributor of the RM2.4bn sales was from Aurora Melbourne Central (RM1.4bn), Residensi 22 (RM403m) and Symphony Hills (RM108m).

• Management shared that its pipeline launches for FY15 would be CS3 – Puteri Harbour, Serene Heights in Bangi, Floresta – Solaris 3, and The Conservatory in Melbourne.

• UEMS’ Ascendas Industrial Park (Phase 1A) will be due for completion by Dec 2015 (71 acres with GDV of approx. RM300m).

• Motorspots City is on track to be launched and has several parties interested in some parts of the parcel, while Gerbang Nusajaya is targeted to launch by in 2HFY15 with no GDV indication at this juncture.

• Earnings visibility. YTD unbilled sales stood at RM5.3bn, representing 1.99x of UEMS’ FY14 revenue.

Risks

• Slowdown in Nusajaya sales; failure to achieve sales target; high-beta stock.

Forecasts

• Unchanged, pending further guidance from management during analyst briefing on 13 March 2015.

Rating

HOLD

Positives

• : highly liquid proxy to property sector; largewar-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 (more than 2x sector average).

Valuation

Given the sector headwinds UEMS faces currently, we maintain our HOLD call. TP is also maintained at RM1.58 (unchanged 60% discount to RNAV or 15.1x FY15E P/E).

Source: Hong Leong Investment Bank Research - 27 Feb 2015