Results

• Above expectation: MB World’s FY17 core earnings came in at RM33.7m (+104.8% YoY), accounting for 124.5% of our full year earnings forecast.

Deviation

• Mainly due to higher-than-expected margin for the product mix.

Dividends

• None for current quarter. FY17 dividend amounted to 3.5 sen per share, which was declared on 28 Sept 2017.

Highlights

• QoQ: 4Q17 revenue expanded by 75.0% due to higher revenue recognition from both Pinnacle Tower (which was completed in Nov 17) and projects in Taman Sri Penawar.
• YoY: Revenue grew by 123.7% with incremental contribution from ongoing developments while core PATAMI more than doubled to RM17.1m.
• FY17: Core PATAMI rocketed to a record high of RM33.7m, more than doubled from RM16.5m previously, thanks to the higher revenue (+90.0%) with recognition from higher sales in Taman Sri Penawar and Pinnacle Tower.
• FY17 sales achieved RM566m and the company is targeting sales of RM231m for FY18, mainly drawing from the new maiden township in Taman Sri Penawar.
• More than RM200m GDV worth of projects are expected to be launched in FY18, lifting the total ongoing developments to exceed RM800m.

Forecasts

• Despite the stronger-than-expected results, we leave our earnings forecast unchanged as we opt to remain conservative on our projections which already offers a compelling investment case on the stock.

Rating

BUY (↔)

• We like MB World given its first mover advantage to capture the spillover effect from the growth in the RAPID project in Pengerang. Earnings visibility for the next few years is well supported by the unbilled sales and strong take-up of newly launched projects. Besides, potential increase in dividend following the projected strong earnings is another positive point.

Valuation

• Maintain BUY with unchanged TP of RM2.75 based on unchanged 35% discount to RNAV of RM4.23.

Source: Hong Leong Investment Bank Research - 26 Feb 2018