2Q20 Revenue flat while earnings down yoy but improve qoq

Plenitude 2Q20 reported revenue of RM54.2m (yoy:-4.8%, qoq:+18.3%) and PAT of RM3.9m (yoy:-54.8%. qoq:+243.6%). While revenue largely in line, earnings disappoint, accounted for 43.2% and 11.9% of our full year FY20F estimate respectively.

Property sector weak sentiment remains

Property division posted revenue of RM32.1m (yoy:-21.6%, qoq: RM25.8m) with operating profit of RM11.1m (yoy:-31.8%, qoq:+69.3%). In view of the weak sentiment in property industry, the Group will continue to adopt cautious approach in new property launches and continue to intensify its marketing and sales initiatives to promote its existing properties.

Hotel operations improved in 2Q20 but outlook dim

Hotel operations registered better revenue of RM22.0m (yoy:+38.3%, qoq:+8.8%) with newly-acquired hotel in Seoul contributed RM5.4 million of revenue for the current quarter while revenue from hotel operations in Malaysia registered a slight increase of RM0.7 million. The outbreak of Covid-19 impacted the tourism seriously and expect revenue from hotel operations to be affected, demand only likely to return after sign of successful containment of the virus .

Maintain BUY with TP cut to RM1.67

Company’s fundamental remain strong and valuation attractive nevertheless we cut our FY20F/FY21F forecast and cut our TP to reflect the increasing challenging environment. We maintained BUY recommendation with lower target price of RM1.67 based on peers’ average P/B ratio of 0.4x of our estimate FY20F NTA.

Source: Mercury Research - 26 Feb 2020