INVESTMENT HIGHLIGHTS

• South Link Lifestyle Apartment received positive response

• Decent take up rate for on-going projects

• Strategic focus in Kuala Lumpur

• Maintain BUY with an unchanged TP of RM2.84

South Link Lifestyle Apartment received positive response. UOA Development Berhad (UOADEV) launched South Link Lifestyle Apartment (GDV: RM550m) recently. Note that South Link Lifestyle Apartment comprises 1,422 units of freehold serviced apartments located within Bangsar South. Take up rate for South Link Lifestyle Apartment is estimated at >20% while booking rate is estimated at >50%. South Link Lifestyle Apartment received good response due to (i) smaller built-up area ranging from 451sf to 859sf which is favoured by young professionals and small families, (ii) dual key concept and (iii) affordable price from RM354k onwards.

Decent take up rate for on-going projects. The two key on-going projects of UOADEV namely Sentul Point (GDV: RM1.5b) in Sentul and United Point Residence (RM1.5b) in North Kiara are enjoying good take up rate since its maiden launches in FY16. Note that Sentul Point contributed 36% of new sales in FY17 while United Point contributed 35% of new sales in FY17. Meanwhile, UOADEV launched the final blocks of the two projects in 2HFY17. Overall take up rate for Sentul Point and United Point Residence is at 67% and 74% respectively as at 31st Jan 2018.

Strategic focus in Kuala Lumpur. Going forward, UOADV will continue to launch more projects in Kuala Lumpur, in line with its strategic focus in Kuala Lumpur. UOADEV plans to launch phase two of Southbank (GDV: RM130m) in Old Klang Road and The Park Residences II (GDV: RM600m) in Bangsar South. Phase two of Southbank comprises one block of suite apartments with strata offices while The Park Residences II comprises of two blocks of residences within Bangsar South. Meanwhile, UOADEV is also focusing on clearing its RM1bil inventories of which half was contributed by UOA Business Park in Shah Alam. Overall, sales in FY18 are expected to be driven by launches of new projects and sale of inventories.

Maintain BUY with an unchanged TP of RM2.84. We maintain our earnings forecast as we have factored in the decent sales of the projects into our forecast. Our call on UOADEV is maintained at BUY with unchanged TP of RM2.84, based on 10% discount to RNAV. We like UOADEV for its focus on launching urban-based affordable priced properties and attractive dividend yield of 6.0%.

Source: MIDF Research - 9 Mar 2018