UOAD’s 4Q14  results  came  in  within  expectations.  Maintain  NEUTRAL with a revised TP of MYR1.90 (10% downside). New sales in 4Q hit only MYR270m,  due  to  the  slow  conversion  of  bookings  into  sales.  FY14 sales  achieved  MYR1.64bn,  down  from  MYR2bn  in  FY13.  Given  the challenging market conditions and hence the small amount of launches, we expect FY15 new sales to decline further to about MYR1.1bn-1.2bn.

Within expectations. UOAD’s 4Q14 results came in line within our and market  expectations.  The  lower  sequential  growth  in  earnings  was largely due to the absence of project completion during the quarter as Le Yuan Residence and Desa 8 were completed in 3Q14. Same as FY13, a 13 sen single-tier dividend was declared for FY14.

New  sales  reached  only  MYR270m  in  4Q.  4Q14  new  sales  achieved only  MYR270m,  from  MYR672m  in  3Q,  bringing  full-year  new  sales  to MYR1.64bn,  down  18%  from  MYR2bn  in  FY13.  4Q  sales  saw  slow conversion of bookings into sales, signaling further tightening in lending by the banks. Key contributors were Vertical office suites – Phase 1 & II, Scenaria,  and  Desa  Sentul  (Phase  I).  For  2015,  in  view  of  the challenging  market  conditions,  UOAD  is  taking  a  cautious  stance  by holding  back  some  of  its  launches  such  as  the  Jalan  Ipoh  and  Desa Sentul  (Phase  II)  projects,  while  North  Kiara  Boulevard  (GDV: MYR120m) and the Kepong project (GDV: MYR300m) are the only ones that  will  be  rolled  out.  Management  also  targets  to  sell  the  Desa Business  Suites  (GDV:  MYR300m)  en  bloc  this  year.  We,  therefore, expect  new  sales  to  trend  down  further  in  FY15  to  about  MYR1.1bn-1.2bn.

Forecast. We lower our earnings forecast by 12% and 2% for FY15 and FY16, respectively. Unbilled sales of MYR2bn (from MYR1.8bn in 3Q14) should largely underpin FY15 earnings.  

Maintain NEUTRAL. While the outlook for property sales looks sluggish, UOAD’s fundamentals are well supported  by  solid  balance sheet  with  a net cash of MYR623m or 44 sen per share. As such, given the softening market,  we  believe  management  will  take  the  opportunity  to  scout  for strategic  and  cheap  landbank  this  year,  which  is  the  key  support  for RNAV.  We  maintain  our  NEUTRAL  rating  on  the  stock.  As  we  update our RNAV, our TP is raised slightly to MYR1.90 (from MYR1.84).

Financial Exhibits

Financial Exhibits

SWOT Analysis

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