Hunza's 9MFY12 results came in above our expectations, with its 9MFY12 net profit accounting for about 86.7% of our FY12 forecast. This outperformance was due to higher-than-expected revenue and margins, largely attributable to the higher average selling prices (ASP) for the completed units of Gurney Paragon Condominium. Nevertheless, due to re-allocation of resources, we are discontinuing our coverage on Hunza with a Not Rated recommendation. Our previous call was Neutral with a FV of RM1.67, based on 0.65x FY12 P/NTA.
Above projections. Hunza recorded a net profit of RM27.5m for 9MFY12, which constituted about 86.7% of our FY12 forecast. This commendable performance was attributed to the higher-than-expected revenue (~83.5% of our FY12 revenue forecast) and margins, thanks largely to higher ASPs for the completed units of Gurney Paragon Condominium. However, revenue was down 34.3% y-o-y due to lower unbilled sales as the company is focusing on the construction of its own investment property known as Gurney Paragon Retail Mall and Office Tower. Nevertheless, Hunza's core net profit declined by only 16.5% y-o-y, mitigated by the higher margins as the EBIT margin jumped to 29.4% for 9MFY12 compared with 22.7% in the same period last year.
Discontinuing coverage. Despite the better-than-expected results, we are discontinuing our coverage on Hunza with a Not Rated recommendation due to the reallocation of resources. Our previous recommendation on Hunza was Neutral with a FV of RM1.67, based on 0.65x FY12 P/NTA.