1HFY21 CNP of RM93.2m came within our expectations but below consensus which might had been overly bullish with its projections given the low unbilled sales to last through the year. 1HFY21 sales of 198m were also within our forecast at 56.5%. No dividends as expected. New planned launches of RM1.05b in 4QFY21 would only see contributions picking up at more advanced construction stages in late FY22. Keep FY21-22E earnings unchanged. Upgrade call to OP (from MP) with unchanged TP of RM1.76 given the slide in share price recently.

Within our but below consensus expectations. 2QFY21 CNP of RM56m brought 1HFY21 CNP to RM93.2m, accounting for 62%/37% of our/consensus estimates respectively. We deem this within our expectation but below consensus’ as we anticipate 2HFY21 earnings to come in weaker on low unbilled sales of RM101m – of which c.RM35-40m will be recognised for the remainder of the year. No dividend as expected as the group only declares dividends in the fourth quarter.

2QFY21 sales of RM117m led 1HFY21 sales to RM198m, within our target of RM350m (at 56.5%). 

Results’ highlights. YoY, 1HFY21 CNP decreased 37% mainly due to: 

(i) lower revenue (-31%) as a result of the less ongoing projects from the absence of launches in FY20, and (ii) lower other income (-19%). Other income came off due to lower rental income since the disposal of UOA Corp Tower (in 3QFY20) and weaker contributions from its hospitality division impacted by Covid-19. 

Despite the FMCO imposed in the month of June 2021, 2QFY21 CNP of RM56.3m increased 52% QoQ on higher revenue (+54%) thanks to the completion of Sentul Point and South Link Residences within the quarter. Note that unlike other developers which had to halt construction at sites, UOADEV managed to continue work (albeit at a slower pace) as they had CLQs (centralised labour quarters) within their construction sites.

New planned launches of RM1.05b in 4QFY21 will only have greater earnings impact starting late-FY22 once construction enters into more advanced stage. These launches include: (i) Desa 3 landed properties (GDV of RM18m), (ii) Laurel Residence at Bangsar South (GDV of RM550m), and (iii) Sri Petaling Phase 2 (GDV of RM480m; located beside Aster Green).

Vaccination update. As of last week, 100% of UOADEV’s construction workers have been fully vaccinated. Hence, operations would likely normalize to 100% in 4QFY21. 

Keep FY21E/FY22E CNP at RM151m/RM185m backed by sales of RM350m/RM600m.

Upgrade to OUTPERFORM (from MP) with unchanged TP of RM1.76 pegged to FY22E 0.7x PBV given the slide in share price recently. Due to the overall uncertainties, the group continues to remain cautious, compromising on short-term earnings by holding out on launches backed by their high cash reserves of RM1.9b (or RM0.89/share).

Source: Kenanga Research - 27 Aug 2021