Tropicana achieved a net profit of RM31.7m in 4Q15, taking 2015 profit to RM227m, which is slightly below our expectation. In 2015, Tropicana achieved property sales of RM1.55bn, and achieved record unbilled sales of RM3.1bn. In 2016, Tropicana plans to launch RM1.76bn worth of properties with target property sales of RM1.5bn. No change to earnings forecast. Maintain BUY with an unchanged target price of RM1.95.

2015 earnings below expectation

In 4Q15, Tropicana reported a core net profit of RM31.7m (-83% yoy; -79% qoq), taking 2015 core net profit to RM226.5m (-27.4% yoy). This came in below our expectation, accounting for 82% of our full year forecast. Tropicana declared a final dividend of 2 sen. 2015 revenue was underpinned by Klang Valley projects (91% of total sales) namely Tropicana Aman, Heights, Gardens and Residences.

Achieved RM1.55bn sales; unbilled sales at record high of RM3.1bn

In 4Q15, Tropicana achieved property sales of RM33m taking FY15 total property sales to RM1.55bn, which is in line with its 2015 sales target. As at end-Dec 2015, Tropicana’s unbilled sales reached a new high at RM3.1bn, underpinned by sales launches in 2015, as well as on-going projects, namely in the central (65%) and northern (25%) regions.

Plan to launch RM1.72bn worth of properties

In 2016, Tropicana plans to launch RM1.72bn worth of properties, of which the bulk of the planned launches will be in central region (43%), followed by northern region (39%). Coupled with on-going projects, it targets to achieve RM1.5bn of property sales in 2016.

Maintain BUY with an unchanged TP of RM1.95

We make no changes to our FY16-17E EPS forecasts. Also unchanged is our RNAV based target price of RM1.95, still based on 50% discount to RNAV. We continue to like Tropicana for its strategic land bank, undemanding valuation and its ongoing asset monetisation exercise. Group’s net gearing has also improved to 0.33x as at end-15, (from 0.68x in 2014). Risk to recommendation includes delays or hiccups in its asset monetisation exercise.

Source: Affin Hwang Capital Research - 22 Feb 2016