Hua  Yang’s  1HFY15  results  were  in  line,  coming  in  at  54/49%  of ours/consensus  estimates.  Net  profit  more  than  doubled  YoY,  as contributions  from  its  new  projects  started  trickling  in.  With  more projects  to  be  launched  in 2HFY15  (Mar), management’s  full-year  new sales  target  of  MYR500-600m  looks  achievable  (1HFY15:  MYR192.2m). Maintain BUY, and a RNAV-based TP of MYR2.74 (19.0% upside).

Within  expectations.  Hua  Yang’s  2QFY15  net  profit  of  MYR26.0m (+>100%  YoY,  +8.5%  QoQ)  brought  1HFY15  net  profit  to  MYR49.9m(+>100% YoY), coming in at 54/49% of ours  and consensus estimates. YoY  1H revenue  grew 51.8%,  underpinned by the  progress billings from its  ongoing  township  projects  such  as  Taman  Pulai  Hijauan,  Bandar Universiti  Seri  Iskandar  (BUSI)  and  new  projects  such  as  Metia Residences and  Sentrio  Suites.  Net  profit margins  have  also  graduallyimproved to 18.6% in 2QFY15 vs 17.5% in 1QFY15.

On track to meet sales target. Total new sales for 1HFY15 were strong at  MYR192.2m  (1QFY15:  MYR81.9m).  The  new  sales  growth  was attributed  to  the  new  phases of  existing  projects  such  as  Taman  Pulai Hijauan  and  BUSI  as  well  as  from  Sentrio  Suites.  Given  its  slew  of pipeline  launches  in  2HFY15,  we  believe  that  management  will  likelyreach  its  FY15  new  sales  target  of  MYR500-600m.  Meanwhile,  its unbilled sales remained resilient at MYR717.9m (1QFY15: MYR756.4m). Net gearing was stable at 0.44x during the quarter. 

Earnings  forecasts.  We  keep  our  FY15/16  forecasts  unchanged pending  a  briefing  later  today. We  are,  however,  introducing  our  FY17 forecasts.

Maintain BUY.  We maintain BUY on Hua Yang  with  an  unchanged TP of  MYR2.74,  based  on  a  10%  discount  to  RNAV.  We  believe  that affordable housing players with units priced MYR500k and below  such as  Hua  Yang,  Matrix  Concepts  (MCH  MK,  BUY,  TP:  MYR3.93)  and Tambun Indah Land (TILB MK, BUY, TP:  MYR3.00)  would  continue to perform  better  than  its  higher-end  peers,  as  the  Government  has recently  announced  several  key  incentives  in  Budget  2015  that  could help to boost home ownership in this segment.

Source: RHB