RESULTS REPORT

YTD 10 FY18 revenue decreased 18.1% vs YTD 10 FY17, whilst prof-its before tax increased 1% over the same period. The increase in PBT is primarily attributed to higher profit margin from the property and con-struction segments. The property industry is expected to remain slug-gish due to weaker domestic demand and tightening lending policies put in place by Bank Negara. SHL Consolidated Bhd ('SHL') is a well run company with a good land bank that has years to run.

INVESTMENT RISKS

Risks to our recommendation and target price include: i) softness in property prices, ii) an increase in the general level of interest rates, and iii) an increase in the cost of building materials.

RECOMMENDATION

We maintain our BUY on SHL but reduce our fair value estimate to MYR 3.08. SHL has a very solid balance sheet and should be able to maintain prospective dividend yields above 6% over FY 2018-2019. SHL re-cently formed a JV with Japan's Marubeni Corp to construct a condo-minium project with an estimated GDV of RM327 mn at Bandar Sungai Long, Selangor. The JV will entail SHL taking up a 67% stake with the remainder held by Marubeni unit. The project sits on a 9.56 acre land consisting of 568 condominium units and is expected to take off soon with an expected completion date in March 2020.

COMPANY PROFILE

SHL Consolidated Bad is an investment holding company and it provides strategic, financial and corporate planning services. SHL Consolidated Bhd. and its subsidiaries are an integrated commercial and residential property development group. which are also involved in granite quany-ing and manufacturing of aggregates, general building construction. earthworks, infrastructure works, the ownership and operation of a golf resort, the manufacture of clay bricks. supply of finished brick-works of wall and other brick structures, the manufacture of aluminum framed doors and windows, the provision of soil and concrete labora-tory testing services, the provision of professional construction man-agement and geo-technical services, the marketing and distribution of building materials, rental of properties and money lending business. Its subsidiaries include SHL Corporate Services Sdn. Bhd., Goodstock (Tavrau) Sdn. Bhd. and Wilayah Builders Sdn. Bhd.

Source: Wilson & York Securities Research - 22 Aug 2017