• 1HFY17 earnings deemed within expectation

• Earnings boosted by Australian project

• Higher cumulative earnings

• Maintain Neutral with unchanged TP of RM1.59

1HFY17 earnings deemed within expectation. Magna Prima 1HFY17 core net income of RM4.6m was deemed within expectation despite meeting 64% of our full year estimates as 2QFY17 earnings was boosted by profit recognition of its project in Melbourne, Australia. Comparison to consensus estimates is not available due to limited research coverage. No dividend was announced for the quarter.

Earnings boosted by Australian project. Magna Prima recorded core net income of RM6.05m in 2QFY17 against core net loss of RM1.4m in 1QFY17, mainly boosted by earnings recognition from remaining completed units of its project in Melbourne, Australia and other local projects. The increase in core net income was in line with higher revenue which grew 223%qoq. Note that we have excluded one-off provision of RM3.5m in our 1QFY17 core net income calculation. Nevertheless, we expect earnings in the quarter to normalise from the strong quarter in 2QFY17.

Higher cumulative earnings. Magna Prima registered cumulative core net earnings of RM4.6m in 1HFY17 against core net loss of RM15m in 1HFY16 due to higher earnings recognition from its project in Australia (The Istana), Jalan Kuching Phase 1 shop office, Desa Mentari commercial project, and residential project in Jalan Kuching.

Maintain Neutral with unchanged TP of RM1.59. We maintain our earnings forecasts for FY17/18. Our TP is unchanged at RM1.59, based on 20% discount to fully-diluted RNAV. Potential catalysts for Magna Prima include value unlocking of Jalan Ampang land either in the form of sale of land or development plans for the land being ironed out.

Source: MIDF Research - 21 Aug 2017