INVESTMENT HIGHLIGHTS

• 1HFY19 earnings in-line with full year estimates

• 1HFY19 CNI increased by 23.3%yoy to RM185.3m

• Ytd new property sales at RM318.8m

• Maintain BUY with an unchanged TP of RM2.45

1HFY19 earnings in-line with full year estimates UOA Development (UOADEV) 1HFY19 core net income (CNI) of RM185.3m was within expectations, making up 52% or ours and 50% of consensus’ full year forecast.

1HFY19 CNI increased by 23.3%yoy to RM185.3m riding on revenue that jumped 23.5%yoy to RM589.0m. The higher on-year numbers are attributed to progressive recognition from on-going projects that include United Point Residence, Sentul Point Suite apartments, South link Lifestyle Apartments and also sales of completed offices and residential units.

2QFY19 CNI climbed 6%yoy to RM125.1m while revenue was up by 12.9% to RM344.3m. Improvement for the quarter can also be attributed to the progressive recognition of United Point Residence, Sentul Point Suite apartments, South link Lifestyle Apartments and sale of stocks. Unbilled sales for 2QFY19 stood at RM1.17b compared with RM1.4b in 1QFY19. Sequentially, earnings shot 107%qoq due to the low base effect in 1QFY19 where earnings are usually softer. This is premised on revenue that jumped 40.7qoq%.

Ytd new property sales at RM318.8m. UOADEV recorded new property sales of RM147.6m in 2QFY19, bringing ytd new sales to RM318.8m. South Link Lifestyle Apartment in Bangsar South is the biggest sales contributor, contributing 20% of new sales followed by SouthLink (19.7%) and Sentul Point Suite Apartments (19.4%). Looking ahead, new property sales should be underpinned by its upcoming new launches - The Goodwood Residence (GDV: RM600m) in Bangsar South, Aspen Green Residence (GDV: RM250m) in Sri Petaling and Bandar Tun Razak Development in Cheras (GDV: RM300m).

Maintain BUY with unchanged TP of RM2.45. We make no changes to our FY19/20F earnings forecast as earnings are on track. We also maintain our TP of RM2.45, based on 17% discount to RNAV. We like UOADEV as we feel upbeat on its strategy of launching urban-based properties in strategic location within Klang Valley. Meanwhile, dividend yield is attractive at 6.8%.

Source: MIDF Research - 27 Aug 2019