Despite only accounting for 14%/15% of our/consensus full- year estimate, 1QFY22 CNP of RM25m is deemed within expectation as we expect subsequent quarters to be stronger. Sales of RM102.9m is also deemed within our RM650m target as we expect sales to pick up upon further launches worth c.RM780m for the rest of the year. With unchanged earnings assumption, MP maintained with TP of RM1.76 on 0.74x FY22E PBV.

Deemed within expectations. Despite 1QFY22 CNP of RM25m coming in weak at 14%/15% of our/consensus full-year estimate, we deem it broadly within expectation as we expect subsequent quarters to register stronger earnings from: (i) bumper margins arising from cost write-backs upon account finalisation at Aster Green and Good Wood Residence slated for completion this year, and (ii) stronger sales from UOADEV’s remaining planned launches worth c.RM780m. As expected, no dividends declared as the group only declares dividend in 4Q.

Sales of RM102.9m also deemed within our RM650m target (at 16%) as we expect sales to pick up upon further launches for the rest of the year. YTD, UOADEV has launched RM275m (from Laurel Residence Block B) out of their RM1.0b planned launches for the year. For the remainder of the year UOADEV will be launching (i) Laurel Residence Block A (GDV of RM275m), (ii) Sri Petaling Phase 2 (planned launch in 2HCY22; GDV of RM480m), and (3) Desa 3 Semi-D (GDV of RM18m). UOADEV could also potentially launch a commercial development in Bangsar South (GDV not finalised) during the year. As of March 2022, unbilled sales stood at RM123m.

QoQ, 1QFY22 CNP of RM24.9m declined 63% on lower revenue (-60%) and weaker GP margins (-17ppt). The weaker revenue was due to lower sales of completed properties during the quarter (at RM21.4m vs. RM90.4m) while the weaker GP margin was due to cost write-backs from South Link Residence in the previous quarter which lifted margins.

YoY, 1QFY22 CNP decreased 33% mainly due to lower revenue (-61%) from lower unbilled sales at the start of the period. Unbilled sales at the start of 1QFY22 were only RM92.5m vs. unbilled sales of RM312m at the start of 1QFY21. The low unbilled sales arose from the lack of launches during the pandemic.

Keep FY22E/FY23E CNP unchanged post earnings.

Maintain Market Perform with unchanged TP of RM1.76 pegged to FY22E 0.74x PBV (5-year mean). Net cash position of the group remains strong at RM1.796b (or RM0.77/share).

Source: Kenanga Research - 31 May 2022