Journey to Wealth

Hunza Properties - Largely within expectations

kiasutrader
Publish date: Wed, 28 Nov 2012, 09:26 AM

Period    1Q13

Actual vs. Expectations  1Q13 core earnings of RM6.0m is considered largely within expectations, although it made up 38% of our estimates. We expect a weaker remaining 9 months as the group is lacking sizeable project launches. 

Dividends   None, as expected

Key Results Highlights    1Q13 sales of RM27m (+4% YoY; -23% QoQ) made up 32% of our FY13E sales target of RM83m; however, given the lack of launches, we deem this as within expectations. Sales were mainly driven by Gurney Paragon Condo (GPC) (44%), Bandar Putra Bertam township (BPB) Phase 3A (41%) and Infinity (15%).

 YoY, 1Q13 core earnings fell 20% given a 19% drop in revenue given less sales and billings. The group was reliant on the already completed GPC and Infinity. Net gearing has also increased to 0.3x from near net cash position due to GP Mall works. 

 QoQ, 1Q13 reported earnings fell 92% because of the previous quarter's non-cash fair value gains arising from GP Mall. Stripping-off the gains, core net profit fell 30% due to proportionately higher overall costs (+9%) compared to revenue stream, which is likely to arise from GP mall. 

Outlook   Over FY13, we believe the group will continue to focus on completing its GP Mall works and may hold back sizeable project launches (e.g. Alila 2). Soon, Hunza will be launching 173 units of double-storey terraces (GDV RM63m) in BPB though we expect project take-ups to be slow since BPB Phase 3A (semi-detached) has only achieved 52% take-up since the launch in 4Q12. 

Change to Forecasts   Maintain FY12-13E earnings. Unbilled sales arising from BPB Phase 3 amounted to RM13m or close to 1 year's visibility. 

Rating  Maintain UNDERPERFORM
 The stock is trading at trough 0.5x Fwd PBV. However, we see no further upside to our TP due to declining profit trends and lack of sizeable new launches in the immediate term.

Valuation    Maintain TP of RM1.50 on 53%* discount to our FD SoP RNAV of RM3.20.

Risks   Sector risks, including negative policies.  

Source: Kenanga
Related Stocks
Market Buzz
Discussions
Be the first to like this. Showing 0 of 0 comments

Post a Comment