Results

• Inline: 4QFY15 increased by 25% QoQ bringing FY15 PATAMI to RM86.7m, accounting for 103% and 110% of ours and consensus’ estimates, respectively.

Dividends

• Declared final dividend of 2.25 sen/share bringing full year dividend to 4.25 sen/share (vs. 4.9 sen in FY14). This represents dividend payout and yield of 35% and 5.3%, respectively.

Highlights

• FY15 revenue fell 30% YoY mainly due to absence of significant property launches coupled with completion of Glomac Damansara Residence and tail-end projects in Bandar Saujana Utama township.

• Sales surged strongly in 4QFY15 to RM420m (vs. RM26m in 3QFY15) bringing full year’s sales to RM506m, meeting company sales target of RM500m. This was mainly driven by sizeable new launches with total GDV of RM463m (Saujana KLIA and Phase 5 & 6 of Lakeside Residences). Both projects enjoy take up rate above 80%.

• To note, Centro V project (comprise of 394 service apartments and 18 units shop office) with GDV of RM263m has been postponed from 4QFY15 to 2H16 due to weak sentiment toward high end product.

• OoQ, unbilled sales has increased from RM537m to RM796m representing 1.7x of the group’s FY14 property development segment revenue.

• For FY16, the group plans to launch RM802m (vs. RM577m in FY15) of projects which mainly comprise of townships and landed residential products with price range from RM500- 600k/unit. The company is looking to achieve sales of RM600m in FY16.

• The property outlook in near term remains uncertain given the weak sentiment post GST coupled with tightening loan approval from bank. We also understand that loan rejection rate for some peer’s projects has surged to as high as 50%.

Risks

• Slowdown in sales
• Weaker margins.

Forecasts

• Unchanged.

Rating

HOLD

• Positives: Strong land-banking, branding and execution track record.

Negatives

• Lack of liquidity / free float

Valuation

• TP is lowered from RM1.04 to RM0.86 after we raised discount to RNAV from 40% to 50% mainly to factor in softer market condition and deferment of launches for the past 2 financial year.
• Maintain HOLD on the stock with dividend yield of 5.5%.

Source: Hong Leong Investment Bank Research - 25 Jun 2015