4QFY20 CNP of RM244m brought FY20 CNP to RM355m – within our and consensus forecasts. Sales of RM1.3b also met our/management’s target of RM1.2b/1.1b. That said, the 1.5 sen dividend is subpar. With ongoing vaccination efforts, we anticipate their property investment division to see a gradual recovery ahead. Revise FY21E earnings lower (by 3%) post update for Suncon’s estimates. Keep MP on marginally higher SoP-TP of RM1.55 post housekeeping.

Within expectations. Bumper 4QFY20 CNP of RM244m (+266% QoQ; +30% YoY) lifted FY20 CNP to RM355m (-44% YoY) – within our and consensus expectations at 98% each of full-year estimates. Note that the bumper profit this quarter was due to the lump sum recognition worth RM182.5m from Sunway Gardens Tianjin and River Cove Residence Singapore which were recognised upon completion. That said, the 1.5 sen dividend declared is below our 3.7 sen forecast.

FY20A property sales of RM1.3b (effective RM1.0b) met our RM1.2b target. Current unbilled sales of RM2.5b (effective RM1.9b) provide c.3x cover. For FY21, management is targeting sales of RM1.6b (effective RM1.4b) – the same as ours. This target is backed by launches worth RM2.8b (40% local: 60% overseas i.e. Singapore and China).

Highlights. QoQ, 4QFY20 CNP of RM244m surged 266% mainly due to the jump in JV contributions (+992%) attributable to the lump sum recognitions from its China and Singapore developments as explained above. FY20 CNP of RM355m plunged 44% YoY due to the Covid-19 pandemic which saw all their business divisions recording weaker bottom-line contributions (save for the bumper profit recognition for its property development division).

Anticipating a recovery. With vaccination efforts underway, we believe its worst hit division, the leisure and hospitability segment i.e. theme parks and hotel parked under its property investment division, should gradually improve from 2HFY21. Note that its property investment division has been contributing an average profit of RM230m/annum (from 2015- 2019) against a loss of RM31m seen in FY20.

Revise FY21E earnings lower by 3% after updating the lower earnings for Suncon. Meanwhile, we introduce FY22E earnings of RM554m backed by property sales of RM1.6b.

Maintain MP with marginally higher SoP-derived TP of RM1.55 (from RM1.54) post year-end house-keeping. We note that its share price has rebounded well in the past two months and has recovered back to pre-Covid-19 levels. We opine that the next set of catalysts to bring the group to new levels hinges on the performance of its healthcare division and its subsequent listing.

Source: Kenanga Research - 1 Apr 2021