Tropicana Corp's FY13 earnings came in stronger than expected, attributed to higher revenue from property development as well as higher land sales in 4Q13. Earnings growth prospects remain favourable, underpinned by its strong unbilled sales of MYR2.18bn. Management is targeting sales of above MYR2bn for FY14, buoyed by some MYR3.2bn in new launches. Maintain BUY and FV of MYR2.19.
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Above expectations. Tropicana Corp (TRCB) FY13 net profit of about MYR188.2m (11.2% y-o-y) was slightly above our estimate. 4Q13 earnings were boosted by profits from land sales and higher progress billings. The company's earnings prospects remain positive, underpinned by new sales amounting to MYR2.16bn in FY13 (9M13: MYR1.85bn) and high unbilled sales totalling MYR2.18bn.
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More than MYR2bn launches planned for FY14. TRCB is targeting for launches of up to MYR3.2bn for FY14, although this figure could be lower given the softer outlook for the property sector. However, it is confident of delivering new sales totalling about MYR2bn in FY14. It will sharpen its focus on the central and northern region, and 40% of the offerings will be landed properties. About MYR566m worth of GDV has been launched so far, including MYR252m in Tropicana Heights in Kajang (landed) and MYR314m in Tropicana Macalister, Penang (high rise). Both projects have received positive response, with tak e-up rates of 62% and 36% respectively.
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Degearing efforts to continue. TRCB will continue with its efforts to degear in FY14 through more land sales and disposing of its non-core assets. Although the group’s net gearing stood at 0.55x as at end-FY13, this could increase to 0.8x as management has allocated total capex of MYR800m for FY14. TRCB continues to actively seek buyers for its investment properties, including Tropicana City Mall. Meanwhile, gains from land sales in FY14 may come in higher than the MYR339m recorded in FY13 given the rise in land prices, as well as the larger land parcels to be put up for sale.
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Maintain BUY. Our FY14 earnings forecast go up by a slight 2% on updating our FY13 numbers. We maintain our FV of MYR2.19, based on a 25% discount to RNAV.
Financial Exhibits
SWOT Analysis
Company Profile
Tropicana Corporation is a developer in Malaysia. The company is known for its flagship developments, Tropicana Golf and Coun try Resort and Tropicana Indah, in Petaling Jaya
Recommendation Chart
Source: RHB
Saturn
Capex increase, ask Berjaya Asset....now next pls....PP2 and Sale of Asset.....Trop. Mall!,
2014-02-21 09:58