INVESTMENT HIGHLIGHTS

• 9MFY17 earnings beat expectation

• Normalised earnings in 3QFY17

• Higher earnings in 9MFY17

• Maintain BUY with unchanged TP of RM1.59

9MFY17 earnings beat expectation. Magna Prima reported headline net loss of RM10m for 3QFY17 mainly owing to provision of liquidated and ascertained damages (LAD) and unrealised forex loss. Excluding the exceptional items, 3QFY17 core net profit stood at RM3.9m. That brings 9MFY17 core net profit to RM8.5m, beating our expectation after making up 118% of our full year estimates. Comparison to consensus estimates is not available due to limited research coverage. No dividend was announced for the quarter.

Normalised earnings in 3QFY17. Magna Prima earnings in 3QFY17 normalised from high base in 2QFY17, declining by 36%qoq to RM3.9m as previous quarter earnings were boosted by earnings recognition from remaining completed units of its project in Melbourne, Australia and other local projects.

Higher earnings in 9MFY17. Magna Prima registered cumulative core net earnings of RM8.5m in 9MFY17 against core net loss of RM4m in 9MFY16, driven by sale of remaining completed units of “The Istana” in Australia, Desa Mentari commercial project and residential project in Jalan Kuching.

Maintain BUY with unchanged TP of RM1.59. We are revising upwards our FY17/18 earnings forecast by 39%/3% to factor in higher contribution from property projects. Our TP is unchanged at RM1.59, based on 20% discount to fully-diluted RNAV. We like improving sales outlook for Magna Prima which should be driven by sales from The View Residence in Shah Alam, Desa Mentari project in Old Klang Road and Boulevard Business Park project in Jalan Kuching. Another potential catalyst for Magna Prima is the value unlocking of Jalan Ampang land.

Source: MIDF Research - 28 Nov 2017