UOAD’s 4Q13 results were within expectations.  It posted  MYR2.02bn in property  sales  in  FY13.  In  line  with  the  industry,  we  expect  UOAD  to maintain the same sales level in FY14. As it plans to focus more on midend housing, it will roll out a few projects with ASPs of MYR600-700 psf this  year.  We  upgrade  UOAD  to  BUY,  with  MYR2.45  FV,  as we expect demand for property to recover gradually from 2Q onwards.

• Within expectations.  Excluding the MYR23.3m  revaluation gain from  a few properties (mainly Nexus-Bangsar South clubhouse), UOAD’s 4Q13 results came in within our and market expectations. The key projects that contributed  to  revenue  included  One  @  Bukit  Ceylon,  Le  Yuan Residence,  Camellia and Horizon.  The quarter also saw the recognition of  an  estimated  MYR45-50m  gain  on  disposal  of  the  company’s  HQ office  building.  It  built  up  its  net  cash  to  a  whopping  MYR304m  from MYR193m  in  3Q13,  while  it  should  also  receive  MYR72.5m  in  cash proceeds in the near term  arising from the disposal of its  HQ.  A 13 sen single-tier  dividend  was  declared,  representing  a  yield  of  >6%.  This dividend is also higher than the 12 sen paid in FY12.
• MYR2.02bn  new  sales  in  FY13.  FY13  new  sales  amounted  to MYR2.02bn,  vs  MYR1.57bn  in  9M13  and  MYR1.7bn  in  FY12.  The contributors  were  the  South View project in Kerinchi, which achieved a take-up of 70% for the first block, as well as The Vertical. The take-up rate for Scenaria is still weak at 44%  vs  42% in  the preceding  quarter. Going forward, in line with the industry, we expect UOAD to maintain its sales  level  in  FY14,  with  a  sharper  focus  on  mid-end  housing.  The company  will  roll  out  MYR2.04bn  worth  of  projects  this  year.  The  key ones include  South View Block 2, South Bank in Old Klang Road, South Sentul Village, Jalan Ipoh and Kepong V projects. All these projects will be priced at MYR600-700 psf, which  is considered affordable given the decent distance to KL city centre.
• Forecasts.  We  finetune  our  forecasts  slightly  after  updating  our  FY13 numbers.  Unbilled sales remained  steady at  MYR1.3bn,  up slightly from MYR1.2bn in 3Q13.
• Upgrade to BUY. We upgrade UOAD to BUY, with an unchanged FV of MYR2.45, based on a 25% discount to RNAV. The stock’s valuations are undemanding,  and we expect demand for property to  recover  gradually from 2Q onwards, after a sluggish 4Q13-1Q14.

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Company Profile
UOAD is a Klang Valley-based developer. The company specialises in building high-rise residential and commercial developments. Its flagship development at Bangsar South has seen strong en bloc transactions.

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Source: RHB