Period     1Q13

Actual vs. Expectations    The 1Q13 net profit (NP) of RM51.1m was broadly in line with the consensus and our estimates, making up 21.8% and 20.1% of the street's estimate and our forecast of RM234.0m and RM254.1m respectively. This is in anticipation of a seasonally stronger 2H.  

Dividends    No dividend was declared in the quarter as expected.

Key Result Highlights   YoY, the 1Q13 revenue increased by 11.5% on the back of a better performance from both the retail segment (+10.7% YoY) and property management services (+17.1% YoY). The strong performance from the retail segment was mainly attributed by the contributions from its new store openings as well as a higher number of sales promotions days during the quarter. 

Meanwhile, the property management services segment also registered strong growth, which was a result of increased contribution from new shopping centres that were opened last year, higher rental rates and the benefits from tenants revamp in some of its existing shopping centres. This led a 35.8% increase in net profit from RM37.6m in 1Q12 to RM51.1m in 1Q13. 

QoQ, the 1Q13 revenue slid marginally by 0.4% due to seasonal factor as year-end trading rebates and a higher revenue number were recorded in 4Q12. As as consequence, the NP dropped by 40.3% QoQ, which translated to a 4.3ppt decline in net margin (from 9.8% in 4Q12 to 5.9% in 1Q13).

Outlook    We remain positive on the company’s future prospects as there will be more new outlet openings in FY13-14 (i.e. a 457,000sq ft shopping mall in Kulai in 2H13 and two more in Bukit Mertajam and Sungai Petani in FY14 respectively) as well as the refurbishment of the existing ones.

Change to Forecasts   We are maintaining our earnings estimates of RM254.1m in FY13 and RM270.4m in FY14 respectively.

Rating    Maintain MARKET PERFORM

Valuation     Post-results, we have raised our target price to RM16.40 (from RM14.14 previously) after rolling over our valuation base year to FY14 with a targeted PER level of 23x, representing a +3SD level above its 5-year mean PER.

Risks    The potential implementation of the GST and subsidy rationalisation program

Source: Kenanga