Result

• Results above expectations. Tambun Indah Land (TIL) posted a core net profit of RM13.6m (excluding RM0.1m fair value gain on investment properties) in its 4Q20 results, soaring 37.4% yoy and 34.7% qoq. Overall, the Group achieved RM25.2m in its full year 2020 core net profit (-40.7% yoy) which exceeds our and consensus full year net earnings estimates by 17-18%. The stronger than-expected results were mainly due to significantly higher revenue achieved.

Comment

• Stronger yoy and qoq. TIL posted better yoy and qoq results for 4Q20 mainly driven by higher revenue, +53.0% yoy and +44.3% qoq. This was attributable to the revenue recognition of a newly launched project, Ambay Park besides the higher recognition of billing progress of some on-going projects which progressed to advanced stage of construction activities.

• Sales improved to hit full year target. TIL chalked up RM66.3m new sales during 4Q20, improving further from RM58.8m sales achieved in 3Q20 and on par with 4Q19’s RM66.3m. Overall, the Group achieved RM168m new sales in 2020, lower than RM185m achieved in 2019, which was within our expectation, but successfully exceeded its sales target of RM130m for the year. We believe TIL could regain its sales momentum back to pre-pandemic level judging by its improving qoq sales. Moving forward, we believe the Group will continue to benefit from the House Ownership Campaign (HOC) 2020 scheme which lasts till mid-2021. In tandem with rising new sales during this quarter, TIL’s unbilled sales also surged to RM92.9m as of this quarter. This renders earnings visibility to the Group for the next 2-3 years. Currently, the Group has on-going projects with a total GDV of RM453.5m.

• Planned launches in 2021. TIL targets to launch a total GDV of RM244m worth of housing projects next year. These are: 1) Aster Villa – a gated and guarded residential development comprising 255 units of double storey terrace houses, semi-detached houses and bungalow in Pearl City, and 2) Ambay Garden - a landed residential development comprising 178 units of double storey terrace houses and semi-detached houses in Pearl City.

Earnings Outlook/Revision

• No change to our earnings estimates.

Valuation & Recommendation

• Maintain BUY on TIL with a higher target price of RM0.75 (RM0.67 previously) as we believe worst is over for TIL and sales continue to improve. Our valuation is now based at 9.5x 2021F PE multiple (from 8.5x previously), which is in line with other large and mid cap property counters’ current valuations.

• Decent dividend yield of over 3-5% for 2020/21F. This is assuming DPS of 2.3sen/3.2sen to be declared for 2020/2021 with minimum dividend payout of 40%. We believe the Group will commit its dividend payments to reward long-term investors as we witnessed its final dividend payment of 2.9 sen/share for its FY19 (full year of 3.9 sen) amid economic uncertainty.

Source: JF Apex Securities Research - 26 Feb 2021