- Bandar Raya Developments (BRBD) core earnings doubled sequentially to RM13mil in 1QFY12 due to stronger progress billings from its ongoing projects such as 6 CapSquare and Verdana North Kiara in Klang Valley and Permas Jaya in Johor.
- Some inventory liquidation at its completed projects such as Troika and One Menerung partly contributed to earnings as well.
- However this was offset by losses in the tune of RM1.8mil from Mieco Chipboard due to weaker demand and plant shutdown.
- Although this only covers 20% of our estimates, we believe BRDB would report better earnings in the subsequent quarters as construction of its ongoing projects picks up pace which means we are sticking to our estimates.
- BRDB is going ahead with the launch of Medang Serai (GDV: RM876mil) in Bangsar in 2HFY12 with 121 units on offer. The starting price of for these units will be about RM4milRM5mil (or at an average of RM1,200psf).
- We are quite positive there will be strong response given that this could be one of the last high-rise developments within Bangsar, if not the last. We are estimating about 60% takeup within the first year.
- Other developments in the pipeline include: (1) 93 units at BluWater, Mines comprising semi-detached, superlink and bungalow houses; (2) Permas Jaya ' about 100 units of semi-detached homes and 62 units of shophouses.
- On the flipside, we believe the disposal of its investment properties should not be packaged as we are sceptical there would be strong interests on the assets apart from BSC. We will not be surprised if there would be continued delay in disposal of these assets.
- We maintain our HOLD rating with our fair value unchanged at RM2.30/share, based on a 35% discount to its fully diluted NAV estimate of RM3.50/share.