Results

• Within expectations: TILB’s 1QFY15 reported PATAMI of RM29.9m came in within expectations, accounting for 23.6% and 25.6% of HLIB’s and consensus’ full year forecasts.

Deviations

• None.

Dividends

• None.

Highlights

• Yoy: The growth in revenue of 16.4% was mainly contributed by residential and commercial properties development in Pearl City. The Pearl City development accounts for 54.4% of the group’s total revenue during the quarter.

• The ongoing property development projects are Camellia Park in Butterworth, B< Residence, Permai Residence and Residensi Bukit Kecil in Bukit Mertajam, Pearl Residence, pearl Impian, Pearl Avenue, Pearl Harmoni, Raintree Park 1 and Pearl Avenue 2 in Pearl City, as well as Straits Garden in Penang Island.

• Qoq: Qoq also enjoyed revenue and bottomline growth on the back of higher sales achieved from newly launched projects (Raintree Park 1 and Pearl Avenue 2), as well as higher work progress from ongoing projects.

• Prospects for FY15: TILB have achieved an average take-up rate of 87.3% for its on-going projects, with total GDV of RM1.2bn. Unbilled sales to date stands at RM443.57m, representing 0.95x of the group’s FY14 total revenue. We gather from our previous meeting that the group’s sales target for FY15 stand at RM400m.

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 - 30 Apr 2015