Broadly Within Expectations

AmProp’s results were broadly within expectations, although full-year FY17 earnings were lower by 78% yoy in the absence of completion of any major development. With further delays for its London projects and weaker sales post Brexit, there could be further downside risk to earnings going into FY18-19E. We drop coverage on AmProp given poor institutional following and, thus, its low trading liquidity.

FY17 Earnings Decline 78% Yoy and 28% Qoq

AmProp’s FY17 core earnings declined 78% yoy, in the absence of any major property disposal (4B Merchant Square, London disposal drove FY16 earnings). Sequentially, its 4Q FY17 earnings also fell 28% to RM3m due to lower profits recognised from the JV contribution, which was largely driven by Tokyo property sales (Westminster Nanpeidai and Conciera Shinjuku) in 3Q FY17.

Projects Have Been Further Delayed, Sales Slow Post Brexit

Going forward, AmProp’s 2 major London projects - Campden and Burlington, will likely now only see a handover by September 2017 (previously delivery dates by 1Q-2Q FY18). Furthermore, we understand that sales for both the Campden and Burlington projects have been slow post Brexit. To date, 37 of the 42 units at Burlington have been sold while Campden has only achieved sales of 43 units out of the 72 available.

Dropping Coverage

Due to limited institutional following and, thus, low trading liquidity, we drop coverage on the stock. Our last recommendation was a HOLD with a SOTPbased 12-month target price of RM0.80. Upside risk would be a pick up in London property prices, while downside risk would be a further depreciation in the British pound.

Source: Affin Hwang Research - 31 May 2017