Results

• Below expectations: TILB’s 2QFY15 fell by 33% YoY, bringing 1HFY15 profit to RM47m, accounting for 37% of HLIB’s and consensus’ full year forecasts.

Deviations

• This is mainly due to some projects are nearing completion and two new launched projects are at early stage of construction.

Dividends

• None.

Highlights

• 2QFY15 PAT fell by 33% YoY and 43% QoQ mainly due to some projects are nearing completion and two new launched projects are at early stage of construction.

• TILB have achieved high take-up rate of 89.2% for its on-going projects, with total GDV of RM1.2bn. These 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.

• TILB achieved new property sales of only RM25m in 2QFY15 (1QFY15: RM146m) due to lack of new launches. Total 1H sales is about RM171m, on track to achieve full year sales target of RM400m. The company targets to launch Raintree Park2 and Avenue Garden worth about RM300m GDV in 2H15.

• Unbilled sales to date stands at RM408m, representing 0.9x 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

• FY15 and FY16 earnings reduced by 15% after factored in slower billing recognition.

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 5.6 FY15E P/E; (4) Decent 7.2% DY (FY15E); and (5) Potential for more RNAV-accretive landbanking exercises.

Negatives

• (1) High project concentration in Penang.

Valuation

• TP is adjusted from RM2.14 to RM1.65 after raising discount to RNAV from 10% to 30% in view of the challenging market look. Maintain BUY on the stock.

Source: Hong Leong Investment Bank Research - 27 Aug 2015