KEY INVESTMENT HIGHLIGHTS

• 9MFY19 earnings within expectations

• Better earnings in 9MFY19

• New property sales at RM583m

• Earnings estimates maintained

• Maintain BUY with unchanged TP of RM2.45

9MFY19 earnings within expectations. UOA Development (UOADEV) 9MFY19 core net income of RM287.2m came in within expectations, making up 79% of ours and 78% of consensus’ full year forecasts.

Better earnings in 9MFY19. UOADEV recorded higher core net income of RM101.9m (+10.6%yoy) in 3QFY19, bringing cumulative core net income to RM287.2m (+18.4%yoy) in 9MFY19. The earnings growth in 9MFY19 was supported by earnings recognition from on-going projects namely United Point Residence, Sentul Point Suite apartments and South link Lifestyle Apartments. Besides, sale of completed units also helped in earnings growth. Meanwhile, unbilled sales decreased marginally to RM1.05b in 3QFY19 from RM1.17b in 2QFY19, providing earnings visibility for less than one year.

New property sales at RM583m. UOADEV registered new property sales of RM265m in 3QFY19, higher than new sales of RM147.6m in 2QFY19. That brought total new sales to RM583m in 9MFY19. Sentul Point is the biggest sales contributor, contributing 16% of new sales followed by South Link (15%) and Goodwood Residence (15%). Looking ahead, new property sales should be underpinned by its upcoming new launches 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 forecasts as earnings are on track. We also maintain our TP of RM2.45, based on 17% discount to RNAV. We think the recent share price weakness present opportunities for investors to accumulate UOADEV. Dividend yield is attractive at 7.3% at current share price. Besides, we remain positive on UOADEV’s strategy of focusing on urban based properties within Klang Valley.

Source: MIDF Research - 27 Nov 2019