1H17 CNP of RM209m met expectations while sales for the period at RM613m is deemed broadly in line against our FY17E target of RM1.42b as bulk of their new launches are skewed towards 2H17. No dividends as expected. Expect RM1.24b worth of new launches in 2H17. Earnings estimates are unchanged. Reiterate MARKET PERFORM with a TP of RM2.63.

In-line. 1H17 CNP of RM209m accounted for 55% each of street’s and our full-year estimates. Sales secured over 1H17 was RM613m which is broadly within expectation at 43% of our FY17E target of RM1.42b as new bulk of their new launches are skewed towards 2H17. No dividends, as expected.

Strong billings. QoQ, 2Q17 CNP rose sharply by 282% to RM166m on the back of a 200% top-line improvement on higher billings and expansion in pre-tax margins by 2.6ppt to 48.8% due to completion of South View, Suria North Kiara and Sentul Pt Ph 1. YoY, 1H17 CNP was lower by 5% albeit the sharp 25% increase in revenue as the 1H16 saw project completions comprising higher margin products (e.g. Desa Green) vs. 1H17, which is reflected in their pre-tax margins (1H16: 63.3%, 1H17: 48.1%). The group remains in a strong net cash position of 0.13x.

2H17 launch pipeline of GDV RM1.24b comprising of Bandar Tun Razak, Cheras (RM300m) project, affordable homes in Selayang (RM90m), South Link (RM550m) and a potential en-bloc sale from the nearly completed Desa Commercial Center (RM300m). The group will also be starting works on South Point (RM220m) which is earmarked as investment property purposes.

No changes to earnings. While the group has a sizeable 2H17 launch pipeline, we prefer to maintain our sales target as timing of the new launches may slant towards year-end, implying that sales could spill over into 2018. Unbilled sales of RM1.39b provide more than 1 year visibility.

Reiterate MARKET PERFORM with a TP of RM2.63 based on 36% discount (slightly above +1SD) to its FD RNAV of RM4.11. At our TP, its FY17E net yields are at 5.7% resulting in thin enough spread to the less risky sizeable MREITs with average net yields of 5.0%. While upsides are limited, the stock is worth holding for its yield stability due to its defensive attributes (pure KL exposure with connectivity plays, high development margins and a strong net cash position).

Risks include weaker/stronger-than-expected property sales, margin fluctuations, and changes in real estate policies and/or lending environments.

Source: Kenanga Research - 24 Aug 2017

In-line. 1H17 CNP of RM209m accounted for 55% each of street’s and our full-year estimates. Sales secured over 1H17 was RM613m which is broadly within expectation at 43% of our FY17E target of RM1.42b as new bulk of their new launches are skewed towards 2H17. No dividends, as expected.

Strong billings. QoQ, 2Q17 CNP rose sharply by 282% to RM166m on the back of a 200% top-line improvement on higher billings and expansion in pre-tax margins by 2.6ppt to 48.8% due to completion of South View, Suria North Kiara and Sentul Pt Ph 1. YoY, 1H17 CNP was lower by 5% albeit the sharp 25% increase in revenue as the 1H16 saw project completions comprising higher margin products (e.g. Desa Green) vs. 1H17, which is reflected in their pre-tax margins (1H16: 63.3%, 1H17: 48.1%). The group remains in a strong net cash position of 0.13x.

2H17 launch pipeline of GDV RM1.24b comprising of Bandar Tun Razak, Cheras (RM300m) project, affordable homes in Selayang (RM90m), South Link (RM550m) and a potential en-bloc sale from the nearly completed Desa Commercial Center (RM300m). The group will also be starting works on South Point (RM220m) which is earmarked as investment property purposes.

No changes to earnings. While the group has a sizeable 2H17 launch pipeline, we prefer to maintain our sales target as timing of the new launches may slant towards year-end, implying that sales could spill over into 2018. Unbilled sales of RM1.39b provide more than 1 year visibility.

Reiterate MARKET PERFORM with a TP of RM2.63 based on 36% discount (slightly above +1SD) to its FD RNAV of RM4.11. At our TP, its FY17E net yields are at 5.7% resulting in thin enough spread to the less risky sizeable MREITs with average net yields of 5.0%. While upsides are limited, the stock is worth holding for its yield stability due to its defensive attributes (pure KL exposure with connectivity plays, high development margins and a strong net cash position).

Risks include weaker/stronger-than-expected property sales, margin fluctuations, and changes in real estate policies and/or lending environments.

Source: Kenanga Research - 24 Aug 2017