FY21 CNP of RM140m came within consensus estimate but missed ours as we had been overly optimistic with our JV projections from Battersea. No dividends declared as expected. FY21 sales of RM2.95b exceeded management’s RM2.4b target but is within our RM2.8b target. Moving into FY22, we anticipate annual sales of RM2.5b backed by planned launches of RM2.8b. Reduce FY22E earnings by 15% after omitting contributions from its Battersea project. Consequently, we reduce TP to RM0.725 (from RM0.735) on unchanged FY22 PBV of 0.53x. Keep OP.

Missed our estimate but within consensus’. 4QFY21 CNP of RM72.0m led FY21 CNP to RM139.8m, accounting for 88%/105% of our/consensus full-year estimates. Results are within consensus estimate but below ours as we had been overly optimistic with our JV projection from Battersea – anticipating a slight profit when a loss of RM8m was registered during the quarter. No dividends declared as expected.

Sales in line. 4QFY21 sales of RM1.02b led FY21 sales to RM2.95b – above management’s RM2.4b target (at 123%) but within our target of RM2.8b (at 105%). Recall that we had revised our sales target higher from RM2.4b last quarter (in 3QFY21) in anticipation of a surge in sales before the HOC ends by Dec 2021. Such sales quantum was backed by launches of RM3.7b during the year.

Highlights. QoQ, 4QFY21 CNP of RM72.5m reversed from a CNL position of RM12.5m mainly due to higher revenue (+90%) in the absence of a 1.5-month lockdown in 3QFY21.

YoY, FY21 CNP of RM140m improved 108% mainly from the higher revenue (+8%) alongside stronger GP margins (+11ppt) attributable to stronger property sales of RM2.95b (+50% from RM2.0b sales in FY20) and easier lockdown measures.

Outlook. For FY22E, we are targeting property sales of RM2.5b (while management targets RM2.6b) backed by planned launches of RM2.8b. Despite the tougher landscape i.e. anticipation of rate hikes in 2HCY22, absence of HOC and persistent overhangs, we believe SIMEPROP has a good chance to meet their target given that most of launches are landed residential in the Klang Valley (comprising 59%) which we opine will perform well. Meanwhile, unbilled sales of RM2.4b provide c.1-year visibility.

Earnings estimates. Post results, we reduce FY22E earnings by 15% to RM236m after entirely omitting our JV projections from its 40% owned Battersea. Introduce FY23E earnings of RM250m.

Maintain OUTPERFORM with lowered TP of RM0.725 (from RM0.735) based on FY22E PBV of 0.53x pegged to -0.5SD from its 5-

year mean. Against peers, we believe SIMEPROP has better earnings visibility as it owns vast land banks (at low rates) in matured townships allowing them to focus on landed/industrial products during these challenging times and therefore be less affected by the high-rise oversupply issue.

Risks include: (i) weaker-than-expected property sales, (ii) weaker margins, (iii) changes in real estate policies, and (iv) changes in lending environment.

Source: Kenanga Research - 25 Feb 2022