Results

• Upholding expectations. Tambun Indah Land (TIL) posted 3Q22 net profit of RM17.4m (+5.1% QoQ, +120.3% YoY) while  revenue stood at RM65.6m (+20% QoQ, +94.1% YoY). Overall,  9M22 is within our forecast with revenue/net profit accounting for 73%/75% of our estimates. 

Comment 

• Launch of Pearl Impiana. Pearl Impiana with a GDV of  RM85.4m has been launched this quarter and has contributed to  the uptick in revenue, recording total sales of RM52.9m with a  61.9% take-up rate.

• Improving QoQ. On the YoY comparison, the Group recorded a  stellar performance due to a lower base last year when it was  facing difficulties during the MCO. QoQ wise, TIL has shown  improvement in revenue, mainly contributed by the strong  increase in new property sales of 181 units worth RM88.9m  compared to 66 units worth RM29.5 in 2Q22.

• Slumped margins. Operating profit margin has declined to  36.3% (-5.9ppt QoQ, +4ppt YoY) this quarter due to a jump in  admin, sales and marketing expenses (+103% QoQ, +47% YoY). Cost of sales has also increased to 57% of revenue this  quarter from 49% in 2Q22 which we believe is caused by the  labour shortage. 

• Unbilled Sales Rebound. Aside from achieving higher property  sales, the Group’s unbilled sales have rebounded from RM68.5m  in 2Q22 to RM90.1m this quarter. We adjusted our full-year 2022 new sales assumption from RM200m to RM180m (vs 2021:  RM297.9m new property sales) as the total new property sales in  9M22 stood at RM133.2m. Nonetheless, we maintain assured  that the unbilled sales are still within its ability to underpin its  earnings visibility for the next 2-3 years. As of 3Q22, the Group  has six on-going projects with a total GDV of RM638.5m. 

Earnings Outlook/Revision 

• We lift our 2022F while lowering 2023F net earnings  estimates by 12.5% and -1.7% to RM64.8m and  RM67.5m respectively after adjusting its new sales  assumption and PBT margin coupled with a neutral  industry outlook in 2023. 

Valuation & Recommendation 

• Maintain BUY on TIL with a target price of RM0.98. Our  target price is pegged at a PE multiple of 6.3x 2023F EPS, which  is its 5-yr mean PE of 6.3x and in our expectations of moderate  growth.   

Source: JF Apex Securities Research - 25 Nov 2022