We  maintain  our  BUY  call  and  FV  of  MYR2.19  for  Tropicana. Management has laid out plans for the rest of FY13, which includes the launching  of  another  MYR2.1bn  worth  of  projects  in  2H13.  This  will likely  help  the  company  achieve  its  new  MYR2.0bn  sales  target  for FY13. Tropicana will also continue to monetise its assets through land sales and the disposal of investment assets. 
 
- More launches ahead. At its briefing, Management updated us with its new  sales  figures  and  upcoming  launches.  To  date,  it  has  already recorded  total new  sales  of  MYR1.3bn,  and  will likely  hit  our  FY13  new sales  target  of  MYR2.0bn.  Tropicana  has  launched  new  projects  worth MYR3.0bn thus far, with a further MYR2.1bn in new developments lined up for introduction to the market in 2H13. Amongst the major launches in 2H  is  the  MYR819m  Tropicana  Bay  Residences  in  Penang  World  City (PWC). Four out of six blocks of the high-end condominium was opened for registration and about 80% have been booked so far. We believe that Tropicana  will  be  promoting  PWC  more  aggressively  now,  as  it  has finally  secured  the  advertising  permit  and  developers’  license  (APDL). Unbilled sales remain high at MYR1.65bn, and it was indicated that this amount could exceed the MYR2.0bn mark by year-end.   

- Continuing  its  asset  monetisation.  Tropicana  continues  to aggressively  sell  its  landbank  as  part  of  its  de-gearing  exercise.  It  has completed  total  land  sales  of  MYR149m  in  1H13,  and  is  targeting  to complete  another  MYR197m  worth  of  land sales in  2H13. Management has  also  indicated  that  future  land  sales  could  amount  to  MYR403m. These  include  land  parcels  at  Jalan  Kia  Peng  and  SS15  in  the  Klang Valley.  Tropicana  still  plans  to  dispose  of  some  MYR883m  worth  of investment  properties,  including  Tropicana  City  Mall  (TCM),  Tropicana City  Office  Tower  and  Dijaya  Plaza.  On  the  disposal  of  TCM  to CapitaMalls  Malaysia  Trust  (CMMT  MK,  SELL,  FV:  MYR1.35), Management  believes  that  TCM  is  currently  worth  MYR500-600m  (net book  value:  MYR444m)  and  expects  the  disposal  to  be  completed  in 1QCY14, should CMMT decide to proceed with the asset acquisition.

- Maintain BUY. With no changes to our forecasts, we maintain our BUY call,  with  an  unchanged  MYR2.19  fair  value.  Our  discount  to  RNAV  of 25% is in line with our valuations for other property stocks of similar size, which are currently valued at 15-25% discount to RNAV.

Source: RHB