Period  4Q14 / FY14

Actual vs. Expectations FY14 core net earnings of RM84.6m were within expectations, accounting for 100% of street estimates and ours, respectively.

 FY14 property sales of RM186m were well within our Rm180m expectations for the year.

Dividends  A single tier dividend of 9 sen was declared for the quarter as expected. The total dividend declared for

FY14 sums up to a total of 16 sen which is well within our assumptions of 15.4 sen.

Key Results Highlights YoY, FY14 core earnings was up by 55% to RM84.6m driven by higher property billings and inventory sales. The sale of NCIP inventories was the main driver of strong EBIT margins expansion in FY14 by 10.5ppt to 39.1%. Its NCIP inventory sales of RM102m were 240% higher as compared to FY13. The group also recognized RM38.8m of investment property revaluation gains for the year, which further boosted its reported earnings to surge by 122%.

 QoQ, 4Q14 core net earnings were down by 42% from RM25.5m to RM14.7m. Its EBIT margin was down by 16.2ppt to 31.9% due to lower property inventory sales from NCIP, coupled with higher operating costs from its management services division. However, its manufacturing and trading division saw an improvement in operating margin of 7.6ppt to 16.6% due to higher sales for export market which command a better margin compared to local sales.

Outlook  According to management, the approval for its affordable township project, namely Bandar Cemerlang (GDV: RM3.0b) is already on its way, while the JV project in NCIP to build apartments is already at Building Plan submission stage. That aside, the group also wanted to time the sale of its NCIP inventories (another RM100-120m GDV remaining) with the launching of a new industrial park in Gerbang Nusajaya by Ascendas for better pricing. Hence, we would expect more affordable housing and industrial launches in 2HCY14.

Change to Forecasts  We lowered our FY15E core earnings by 11% to RM84.8m as we reduced our property sales assumption from RM250m to RM210m due to the timing of launches. We also introduce our FY16E earnings estimates of RM93.2m (+10.5%, YoY) as we expect the growth would be supported by the launches from its new launches that are skewed towards the end of FY15 (Sg. Rekoh land & Bandar Cemerlang).

Rating Maintain OUTPERFORM

Source: Kenanga