Journey to Wealth
UEM Land - OUTPERFORM - 28 May 2012
Period 1Q12
Actual vs. Expectations
1Q12 net profit of RM54m is considered broadly in line with expectations, although it only makes up 15% of the street's FY12E earnings of RM356m and 14% of our RM393m. 1Q12 is a much shorter working quarter due to the festive season. Also, previous 1Qs only made up <10% of full year earnings. 2H12 is likely to be stronger given the current timing of launches and land sales.
Dividends No dividends as expected.
Key Results Highlights
YoY, 1Q12 bottom line grew 208% given strong billings from Nusa Idaman, Dutamas, 28 MK, Quintet, etc. Pretax margin improved by 9.6ppt to 23.6% given a higher project margin mix and lower finance cost (-24% YoY).
QoQ, 1Q12 earnings slid 61%, which is typical given the reasons mentioned above; 4Qs are also the strongest as they tend to register major land sales.
1Q12 sales of RM290m comprised of 57% Nusajaya projects with Klang Valley making up the remaining 43%. 1Q12 sales only made up 10% of UEMLAND and our FY12E target of RM3.0b because of timing of new launches and land sales. For example, YTD Apr-12 sales came up to c.RM430m due to launch of Summer VOS in the month itself.
Outlook Although 1Q12 sales appear weak, management is confident of meeting its FY12E KPI target (sales: RM3.0b; ROE: 10%) (Refer overleaf for details). We can also look forward to potential en bloc sales, new launches and Nusajaya land sales by 2H12.
Change to Forecasts
No changes to FY12-13E earnings of RM393mRM501m. Unbilled sales of RM1.85b provide c.1 year of visibility.
Rating MAINTAIN OUTPERFORM
Beneficiary of the burgeoning demand of properties in Iskandar Malaysia, with 2011 tipping points as catalysts with spill-over impact from Singapore.
Valuation Maintain a TP of RM2.65 based on 19% discount* to our FD SOP RNAV of RM3.26
Risks Unable to meet sales target. The up-cycle of Singapore's property sector. Sector risks, including negative policies.
Source: Kenanga
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