Results

• Within expectations: FY15 core profit fell by 66%, accounting for 99% of our estimate.

Deviations

• None.

Highlights

• FY15. YNH’s core PA T plunged by 66% YoY mainly due to completion of project Fraser Residence KL, softer take up rate in the on-going projects coupled with lack of new launches.

• FY15 earnings drivers. Y NH’s FY15 performance was mainly derived from progressive sales of unsold units in Fraser Residence Kuala Lumpur, progressive profit recognition from Taman Desa Manjung and sales of development land.

• Kiara 163. In view of the challenging environment, YNH is cautiously optimistic on the Kiara 163 project in Mont Kiara. This is a mixed development RM1bn GDV project with 60% comprising of service apartments which are planned to be sold fully furnished. The retail shopping mall will also be one of the main attractions.

• Sfera Residensi (GDV: RM418m) located in Puchong South, is expected to contribute over the next 3 years. With piling and substructure already commenced, the group is expecting the project to contribute positively for the next three years.

• Menara YNH with GDV of RM2.1bn has already obtained development order, which will comprise of office tower and shopping mall.

Risks

• Concentration risk from very few active projects; vulnerable to cost escalation and work disruption; Lack of liquidity.

Forecasts

• Unchanged.

Rating

• Cease Coverage, TP: RM1.85
• Posi tives: Above-industry-average gross margins; lowcost, sizeable and fully paid-for landbank.

Negatives

• : Concentration risk from very few active projects, vulnerable to cost escalation.

Valuation

• Officially cease coverage on the stock due to redeploy of research resources.
• Our last recommendation was HOLD with a target price of RM1.85 based on unchanged 50% discount to RNAV.

Source: Hong Leong Investment Bank Research - 1 Mar 2016