Results

• Within Expectation: FY16 PATAMI achieved RM147m, accounting for 104% and 99% of our and consensus full year estimates respectively.

Dividends

• None.

Highlights

• YoY: 4QFY16 revenue increased slightly by 3% due to higher contribution from Residensi 22, Serena Heights and Teega. However, PATAMI decreased by 26% mainly due to provision for LAD and lower shares of profit from JVs.
• QoQ: PATAMI improved by 47% mainly due to higher recognition from MK22, Teega and Verdi coupled with increase in profit from JVs.
• In 4QFY16, UEMS achieved new sales of RM662m (versus RM280m in 3QFY16), bringing FY16 sales to RM1.37bn, exceeding full year sales target of RM1bn. The strong sales performance in 4QFY16 is mainly driven by the enblock sales for Almas, Puteri Harbour with total amount of RM368m (take up rate increased from 38% to 89%).
• On international side, sales were mainly contributed by The Conservatory Melbourne with take up rate increasing from 81% to 88% QoQ.
• UEMS is targeting sales target of RM1.2bn (+20%) in FY17. The is on the back of four projects launches with total GDV of RM1.7bn comprising i) D’ Santuari (GDV: RM107m), ii) Solaris 3 (GDV: RM735m), iii) Serene Heights (GDV: RM144m) and iv) St Kilda, Melbourne (GVD: RM713m).
• In addition, Phase 3 of SILC (GDV: RM500m) was officially launched in Feb 17 with approximately 4.1 acres of land was sold to a subsidiary of Crown Worldwide Group for RM16m or (RM88 psf).

Forecasts

• Earnings forecasts unchanged.

Rating

HOLD ↔

• Despite trading at a steep discount to its RNAV, we see lack of near term catalyst with subdued sentiment for property outlook in Johor.

Valuation

• We maintain our HOLD call with unchanged TP of RM1.03 (with unchanged 65% discount to RNAV of RM2.93).

Source: Hong Leong Investment Bank Research - 28 Feb 2017