Journey to Wealth
UOA Development - OUTPERFORM - 30 May 2012
Period 1Q12
Actual vs. Expectations
We consider 1Q12 net profit of RM40.9m broadly in line with expectations, although it only makes up 14% each of the street's FY12E net profit of RM299.0m and our RM287.7m. We expect subsequent quarters to be stronger due to timing of new launches and billings.
Dividends Proposed FY11 NDPS of 10.0 sen (6.4% yield) and the dividend reinvestment scheme (DRS) have been approved in the AGM yesterday. The payment date has yet to be set but is scheduled over the next three months.
Key Results Highlights
YoY, 1Q12 net profit was down by 69% because of 1Q11's fair value gains of RM92.3m, however, core earnings did grow 8% on higher billings.
QoQ, 1Q12 core earnings of RM40.9m was up 15% YoY due to pretax margins (ex fair value) improving 4.9ppt to 42.2%. This is because 4Q11 admin/general expenses registered front-loaded provisions on rental guarantees.
1Q12 saw sterling sales of RM443m, or c.50% of our FY12E sales target of RM0.9b, mainly driven by Le Yuen Residences, Vertical Suites@Bangsar South City and One@Bukit Ceylon. However, we do not expect 1Q12 to be repeated in 2Q12 as major new launches (Glenmarie/Subang Land GDV: RM1.0b; Kiara IV GDV: RM0.5b) will only likely take place in 3Q12.
Outlook Subsequent quarters will be stronger as we expect 1) recognition of en bloc sale to DKLS Industries for RM93.8m and 2) billings from advance or near completion projects (e.g. Binjai 8, Setapak Green, Camellia@Bangsar South City).
Change to Forecasts
Maintain FY12-13E net profit of RM287.7mRM362.3m. No change to sales targets but expect better quarters ahead. Unbilled sales of RM0.7b provide a 1-year visibility.
Rating MAINTAIN OUTPERFORM
Expect UOA's projects to buck the bearish trend while the anticipation of its continuous strong dividend payouts will lend strength to the stock. FY12-13E net dividend yields will be attractive at 8.2%-7.7%, while FY12E will also enjoy FY11 dividends of 10.0 sen.
Valuation No changes to our TP of RM1.65, based on a 52% discount* to FD SoP RNAV of RM3.46.
Risks Unable to meet sales targets. Fall-through of en bloc sale. Sector risks, including negative policies
Source: Kenanga
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