Being resilient. Being a Perak-based property developer that focuses on affordable housing (priced at ~RM200k/unit), we reckon LAGENDA will stay resilient despite the prevailing tepid market, reflected by its recent strong sales and booking of RM1.2bn in 9MFY21. On the back of LAGENDA’s ability to acquire sizeable lands at low cost (5-6% GDV), the recent hike in raw material prices is not expected to hit its bottomline materially, thanks to its superior >20% PAT margin (peers:5-15% PAT margin).

Growth story remain intact. LAGENDA is planning to launch c.6k units of houses for FY22 with GDV of RM1.0-1.2bn where half of it will be coming from its new township in Tapah, Sg Petani and Mersing. With current inventory of RM512m, aggregate GDV available for sale in FY22 will be around RM1.7bn. With regards to sales target, management is targeting 20-30% growth on confirmed property sales for FY22 which we believe could possibly be around RM800m -RM1bn (vs 9M21 confirmed sales: RM496m). In the wake of the latest 12MP plan to focus on building more affordable houses, we expect LAGENDA’s new launches to experience a robust take-up rate.

Anticipate a better 4Q. Following the migration to Phase 4 of NRP in Perak in early November, LAGENDA is expected to recognize higher progress billings for its upcoming results on the back of pick up in construction activities. Hence, we expect a better showing in 4Q21 result QoQ.

Pending a breakout. Technically, LAGENDA is poised for a resistance breakout with indicators showing uptick bias. A successful breakout above RM1.58 hurdle would spur the prices toward RM 1.65-1.70 territories. Cut lost at RM1.41.

Source: Hong Leong Investment Bank Research - 22 Nov 2021