Result

• A positive surprise of 4Q; Earnings beat estimates. Tambun Indah Land (TIL) posted a net profit of RM28.5m for its 4Q21 results, soaring 108.0% yoy and 260.8% qoq on the back of surging revenue, +75.7% yoy and +218.0% qoq. For 2021, TIL recorded net profit of RM61.6m, rising 140.6% yoy, which exceeds our/consensus full year net profit estimates by 43%/41%. The stronger-than-expected results were mainly due to higher recognition of progress billings during this quarter as actual revenue (+93.6% yoy) exceeds our full year topline estimate by 41%.

Comment

• Stronger yoy and qoq. The better yoy results were mainly attributable to higher work-in-progress and higher new sales driven by Home Ownership Campaign 2021 (HOC 2021) initiated by the government, as well as the launch of a new project named Ambay Garden during the quarter. Majority of revenue was contributed by Pearl City, Simpang Ampat, which accounted for 82% of the total revenue for this quarter. Similarly, the stronger qoq results were also due to the abovementioned reasons coupled with better margin achieved (PBT margin: +5.8ppt qoq).

• Surge in quarterly sales. TIL chalked up RM150.5m new sales during 4Q21, soaring from RM15.9m sales achieved in 3Q21 and 4Q20’s RM66.3m. For full year 2021, the Group raked in RM297.9m property sales, far exceeding our RM180m news sales assumption for this year. In tandem with better new sales, TIL’s unbilled sales also increased substantially to RM131m from 3Q21’s RM89.1m. This renders earnings visibility to the Group for the next 2- 3 years. Currently, the Group has eight on-going projects with a total GDV of RM699.2m.

• Future project launch. Under prevailing challenging operating atmosphere, the Group will continue to exercise prudence in new project launches, mainly focusing on affordable and mid-market landed residential projects. TIL aims to launch its Pearl Impiana - a landed residential development comprising 148 units of double storey terrace houses and semi-detached houses in Pearl City, with a total GDV of RM76.7m in the immediate future.

Earnings Outlook/Revision

• We lift our 2022F and 2023F net earnings estimates by respective 27.7% and 37.4% to RM57.6m and RM68.7m following the higher new sales achieved in 4Q2021 and upward revision of our 2022-2023 new sales assumption.

Valuation & Recommendation

• Upgrade to BUY from HOLD on TIL with a higher target price of RM0.93 (from RM0.75) following our earnings upgrade. Our revised target price is now pegged at 7x 2022F PE multiple, which is at its 5-year mean PE and in line with other small and mid-cap property counters’ current valuations.

• Attractive dividend yield. Shareholders could expect decent dividend yield of slightly over 7% for 2021-2022F. This is assuming DPS of 5.7sen/5.3sen to be declared for 2021/2022 with minimum dividend payout of 40%. The Group will commit its dividend payments to reward longterm investors amid current economic uncertainty.

Source: JF Apex Securities Research - 25 Feb 2022