3Q14 results came in  within  expectations.  Maintain BUY with a revised MYR2.40  TP  (from  MYR2.45,  11.1%  upside).  New  sales  jumped  toMYR672m  in 3Q  (2Q: MYR362m), bringing the 9M total  to MYR1.37bn. A few new projects contributed to the sales while  others, which did not do well  previously,  also  showed  improvements.  Thus,  we  think  it  is possible for UOAD to end the year with about MYR1.7bn in sales.

Within  expectations.  UOA  Development’s  (UOAD)  3Q14 results came in line with our and market expectations. The strong sequential growth in turnover  was  mainly  contributed  by  Desa  Green,  South  View,  Vertical Office  Suites,  and  the  recently  completed  Desa  Eight  and  Le  Yuan Residence.

New  sales  surged  to  MYR672m  in  3Q.  After  the  sluggish  1H performance, new  property  sales  hit  MYR672m in 3Q  vs  MYR362m in 2Q14,  bringing  9M14  new  sales  to  MYR1.37bn.  Many  projects contributed to the strong sales,  as the  signing of the  sales and purchase agreements  took  place  during  this  quarter.  These  include  South  View (MYR522m),  Scenaria (MYR200m),  Southbank Residence (MYR225m), Desa  Sentul  (MYR181m)  and  Kencana  Square  (MYR110m).  Note  that sales  from  Scenari  have  finally  picked  up  as  construction  works progressed.  Its  take-up rate  achieved  65%  vs  a flat  44%  over  the  last three quarters. Meanwhile, given the scale of developments, the projects in  Jalan  Ipoh  and  Kepong  have  been  deferred  to  next  year.  While  no other launches were planned for 4Q, we expect the conversion into sales to continue in the final few months, especially SouthBank Residence and Desa  Sentul,  which  have  received  encouraging  take-ups  since  their launches. Although it is a  15% drop from last ear’s MYR2bn, we expect UOAD to  possibly  end the  year  with  MYR1.7bn  in  new  sales,  which is still  a  decent  level,  considering  the  challenging  operating  environment this year.

Forecast.  We maintain  our  forecast.  As a  result  of  the  strong  sales  in 3Q,  unbilled  sales  increased  to  MYR1.8bn  (2Q14:  MYR1.6bn),  mainly from Desa Green, South View, Vertical Office Suites and Scenaria.

Maintain  BUY.  We maintain  our  BUY  call  on the  stock.  As  we  update our  RNAV  for  the  latest  share  base  and  new  landbank,  our  TP  is adjusted slightly to MYR2.40 (from MYR2.45).

Source: RHB