RESULTS REPORT 

YTD 10 FY19 revenue increased 0.6% vs YTD 10 FY18, whilst profits before tax increased 21.7% over the same period. The increase in revenue is mainly due to the successful new launch of Sg Long Resi-dence located at Bandar Sungai Long, Selangor Darul Ehsan in February 2018. The property industry is expected to remain sluggish due to tighter lending policies put in place by Bank Negara and a broadly weaker economic environment. SHL Consolidated Bhd ("SHL") is a well run company with a good land bank that has years to run. The company's emphasis on good value has helped it maintain steady earnings despite very challenging conditions. 

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 HOLD recommendation on SHL whilst increasing our fair value estimate to MYR 2.72. SHL has a very solid balance sheet and should be able to maintain prospective dividend yields above 4% over  FY 2019-2020. SHL recently formed a JV with Japan's Marubeni Corp to construct a condominium 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 Bhd 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 quarry-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 (Tawau) Sdn. Bhd. and Wilayah Builders Sdn. Bhd.

Source: Wilson & York Securities Research - 21 Aug 2018