News  UOAD announced that it has acquired 2 ordinary shares of RM1.00 each in Fabullane Development S/B which in turn owns 1.92 ac of freehold land adjacent to Bangsar South City (BSC) (same row as UOAD’s Southview). The implied cost of the land is around RM24.4m (RM2,91psf) as UOAD will assume the liabilities of Fabullane.

Comments  No GDV guidance as the company will only be embarking on the land’s development in 1-2 years’ time. However, based on Southview’s GDV per acre of RM225m, we derive a GDV of c. RM0.43b.

 The land price is fair considering that market prices in the area (for small plots) are going for RM250-300psf. We are unable to compare land prices with Southview as the acquisition was made some years back. Based on our assumed GDV, land cost makes up some 6% of GDV, which is attractive considering that land cost tends to make up 10%-15% of GDV nowadays. The acquisition will be funded internally and impact to its net cash position is minimal.

 We are NEUTRAL on the acquisition. While it bodes well for the group in the medium to longer term for landbank, the acquisition is quite small and contributions from this project is unlikely in the next 1-2 years.

 Impact on RNAV is minimal. Based on our GDV estimates, this increases our FD RNAV by 3 sen (+0.9%) to RM3.73. We are also taking the opportunity to update our FD RNAV to RM3.75 after taking into account the net positive impact arising from its increased share base from the DRPs and higher GDV for Southview and Scenaria. Assuming unchanged RNAV discount of 46%, this would increase our TP to RM2.04 (from RM2.00).

Outlook  We do not expect any new launches in 4Q14 as the group will concentrate on converting its booking sales into SPA (e.g. Southbank, Sentul Village). Key launches for FY15 are expected to amount to a total GDV of RM2.23b.

Forecast  No changes to earnings.

Rating UNDER REVIEW

Valuation  Our CALL/TP is UNDER REVIEW pending our upcoming sector strategy report. We are increasingly concerned about the challenging property landscape. Our previous recommendation was MARKET PERFORM with a TP of RM2.00.

Risks to Our Call Unable to meet its sales target or better-thanexpected sales/earnings. Unexpected en-bloc sales of office inventories. Sector risks, including further negative policies.

Source: Kenanga