INVESTMENT HIGHLIGHTS

• FY17 earnings above expectation

• Higher earnings in FY17

• Earnings estimates revised upwards

• Maintain BUY with unchanged TP of RM1.59

FY17 earnings above expectation. Magna Prima FY17 core net income of RM14.8m came in above expectation, making up 146% of our estimates. The positive deviation is mainly due to faster-thanexpected progress billing. Comparison to consensus estimates is not available due to limited research coverage. No dividend was announced for the quarter.

Higher earnings in FY17. Magna Prima recorded core net income of RM5.1m 4QFY17, bringing full year core net income to RM14.8m (+232%yoy). Note that we have excluded provision of liquidated and ascertained damages (LAD) and unrealised forex loss in our core net income calculations. The higher earnings in FY17 is mainly due to earnings recognition of residential project in Jalan Kuching, Desa Mentari commercial project and sales of remaining completed units of “The Istana” in Melbourne. Meanwhile, Magna Prima recorded new sales of RM105m in FY17, while unbilled sales of RM40m provides earnings visibility of less than one year.

Earnings estimates revised upwards. We revised upwards our earnings forecast for FY18 by 7.6% to take into account of the faster progress billing. We also introduce our earnings forecast for FY19.

Maintain BUY with unchanged TP of RM1.59. Our TP is unchanged at RM1.59 despite the earnings upward revision as our TP is based on RNAV. Our TP is derived based on 20% discount to fullydiluted RNAV. We expect new property sales outlook for Magna Prima to be stable, underpinned by its on-going projects namely The View Residence in Shah Alam, Desa Mentari project in Old Klang Road and Boulevard Business Park project in Jalan Kuching.

Source: MIDF Research - 1 Mar 2018