INVESTMENT HIGHLIGHTS

• Acquiring Pantai plots in KL

• Positive on the land acquisition

• Strong balance sheet

• Earnings forecasts maintained

• Maintain BUY unchanged TP of RM2.45

Acquired Pantai plots in KL. UOA Development (UOA DEV) announced that it has acquired 2 ordinary shares in Naik Makmur Development Sdn Bhd (Naik Makmur) for total consideration of RM24.7m. Naik Makmur currently holds 2 parcels of freehold land in Pantai totalling 0.62 acre.

Positive on the land acquisition. We are positive on the land acquisition as it would enable UOADEV to strengthen its presence in Klang Valley where we see a stable long-term outlook for property. The land is located within township and business district of Pantai and it is within walking distance to the Kerinchi LRT station. The land acquisition is in line with UOADEV’s strategy of focusing on property development within Klang Valley.

Strong balance sheet. The acquisition will be funded by cash from internally generated funds. Funding is not an issue to UOADEV considering its cash pile of RM443m as at end September 2018. Balance sheet of UOADEV will remain sturdy at net cash position post the land acquisition. Meanwhile, at this juncture, we see minimal earnings impact from the land acquisition in FY18/19 as GDV and launches timeline are yet to be finalised. Hence, we maintain our earnings forecasts for FY18/19.

Maintain BUY with an unchanged TP of RM2.45. We maintain our TP of RM2.45, based on 17% discount to RNAV. We maintain our BUY call on UOADEV as we remain sanguine on its strategy of launching urban-based affordable priced properties in Klang Valley which are favoured by property purchaser. Meanwhile, dividend yield of UOADEV is attractive at 7.2%.

Source: MIDF Research - 28 Dec 2018