Hua Yang’s management said in a briefing that it  will continue to focus on  landbanking  activities  in  2HFY15  (Mar),  with  the  Penang  mainland and  Kota  Kinabalu  as  potential  new  target  markets.  Interestingly,  the company expects some buyers  to  hold off  the purchase of new homes until  after  the  GST  is  implemented.    Nonetheless,  it  is  still  targeting MYR1.1bn of new launches for FY15.  Maintain BUY, and a RNAV-based TP of MYR2.74 (15.0% upside).

More  landbanking  activities  expected  by  end-FY15.  Hua  Yang’s management  said  in  a  briefing  that  it  will  continue  to  guide  for  more landbanking activities  over the next six months and targets  to replenish between MYR500m and  MYR1bn in GDV. While  it will still be looking at landbank within its current markets of Klang Valley, Johor and Perak,  the company's current priority  would  be to penetrate into new markets. Thus far,  it has identified  the  Penang mainland and Kota Kinabalu, Sabah, as possible  new  targets.  The affordable  housing segment remains the keyfocus  in  these  new  markets,  and  we  expect  it  to  target  growing  its landbank in secondary towns to maintain its 25-30% gross margin.

Expect  slower  house  purchases  ahead  of  GST  implementation. Unlike the general market’s expectation of consumers frontloadin g  bigticket items ahead of  the GST implementation, Hua Yang’s management believes  that some buyers  could hold off  the purchase of properties until after  the  tax  is implemented in Apr  2015. It  thinks  that  buyer  sentiment will likely be affected due to the uncertainties over the change in property prices  post  GST.  Nonetheless,  we  believe  that  its  new  sales  target  of MYR500m-600m is still achievable  on the back of  new launches worthMYR1.1bn  that  have been planned  for the year  (including the last phase of its flagship project, One South).

No change to projections. We maintain our earnings estimates.

Maintain BUY.  We maintain BUY on Hua Yang  with  an  unchanged TP of  MYR2.74,  based  on  a  10%  discount  to  RNAV.  Its  P/E  valuation  isundemanding at  about 6x  and  dividend  yield  is  attractive at  5-6%.  We believe that affordable housing players with units priced MYR500k and below  would  continue to  fare  better than its higher-end peers  under  the current market conditions.

Source: RHB