We raise our fair value to MYR2.88, as we see further upside given the current sector wide re-rating. UOAD’s 1Q13 results came in above expectations. We maintain our MYR2bn sales target for the year. In 1Q alone, UOAD has already achieved almost MYR930m. The solid cash pile gives high certainty of dividend payout, and will serve as a war chest for future landbanking, which will boost total portfolio GDV further.

♦  Above expectations. UOAD’s 1Q13 results came in above our and market expectations on an annualised basis. The strong growth in earnings was mainly driven by an enbloc disposal of an office building to Pelaburan Hartanah Bhd (PHB) amounted to MYR183m, as well as the final batch of remaining units at Binjai 8, and the other ongoing projects such as Kencana Square.

♦  Solid cash pile. As a result of the cash proceeds from last year’s enbloc sales, UOAD’s net cash has increased to MYR383m from MYR244m. The amount is expected to rise further when the cash from the sale to PHB is received in 2Q. Apart from sustaining the dividend payout, the cash will also be utilised for landbanking. We understand that the management is close to sealing some landbank deals soon. They are largely located within the Klang Valley.

♦  MYR928.7m sales in 1Q. UOAD achieved sales of almost MYR930m in 1Q. The bulk of it (MYR393m) mainly comes from Desa Green, which is nearly fully sold out. Meanwhile, Scenaria, with a take-up rate of 77% for Block 1, contributed about MYR120m to the total sales, and Horizon contributed MYR183m from an enbloc sale to PHB during the quarter. We maintain our sales target of MYR2bn for 2013. We are confident that the company will be able to achieve the target, given the amount of new projects in the pipeline, which include Vertical office suites Phase II, Scenaria Block 2, and South View Residence.  

♦  Forecasts. Unchanged. Earnings are likely to taper off slightly as enbloc sale value is lower in 2Q. Unbilled sales are now MYR1.1bn. 

 
♦  Maintain Buy at MYR2.88. In view of the re-rating of many property stocks, we see further upside in the share price given UOAD’s solid track record. We raise our fair value to MYR2.88 (from MYR2.60), based on a lower 10% discount to RNAV (from 15%). The implied FY14 PER based on our revised fair value is undemanding at 10.2x.

Source: RHB