Period     1Q13

Actual vs. Expectations     1Q13 net profit of RM43.8m was within expectations, making up 27.5% and 26.3% of street and our FY13E earnings. 

Dividends    No dividend was declared for the quarter.

Key Results Highlights    QoQ, 1Q13 core net profit fell by 9.4% despite a 30.4% growth in revenue as the quarter incurred higher interest expense (19.1% QoQ), as well as, higher tax bracket of 36.7% vs. a tax credit in 4Q12. 

YoY, 1Q13 earnings jumped substantially by 255.1% given RM125m land sales, billings from Tropicana Grande, Tropicana Avenue, Danga Bay@ Tropez Residences and improved yields from Tropicana City Mall and office tower.

Without the land sales net gain of RM58.1m in 1Q13, PBT was RM8.7m (-85.9% YoY). 

The group has achieved RM254m property sales in 1Q13, which is 12.7% of its RM2.0b sales targets for FY13E and mainly driven by the projects that launched towards the end of last year namely Tropicana Danga Bay, Tropicana Danga Cove and Tropicana Avenue. In terms of land sales, the group has met 57% of our assumed land sales for the year. 

Outlook    Dijaya’s FY13E sales target of RM2.0b (ours: Change to Forecasts RM2.0b) will be mainly driven by Penang World City, Tropicana Danga Bay, Tropicana Danga Cove, Tropicana Gardens, etc. We believe RM2.0b sales target is achievable on the back of RM3.0b new launches that are planned for the year.

Change to Forecasts    No changes to our FY13-14E net profit of RM166m-RM194m. Unbilled sales of RM1.1b provides about 2 years visibility.

Rating  Maintain OUTPERFORM

A sector driven call due to the exciting sector dynamics especially their huge land bank in Iskandar.

Valuation     Maintain TP of RM2.15 based on 40% discount to our FD SoP RNAV of RM3.58.

Risks    Unable to meet sales targets; this will be more impactful on developers with higher net gearing.

Sector risks, including negative policies.

Source: Kenanga