SHL’s FY15 net profit of MYR104.6m (+87% YoY) accounted for 140% of our full-year estimate, mainly attributable to good response to its projects and higher share of profit from its associate. Maintain BUY with a higher TP of MYR5.60 (65% upside), pegged to a lower FY16F P/E of 12.1x (FY16F ex-cash P/E: 9.4x), after taking into consideration softer property market sentiment.

An outstanding FY15 (Mar). SHL Consolidated’s (SHL) FY15 core net profit of MYR104.6m (+87.3% YoY) accounted for 140% of our full-year estimate. The better results were mainly backed by: i) sales of highermargin properties at Rawang Corporate Industrial Park, Sungai Choh, ii) good response to the new phases launched from the Goodview Heights project, and iii) higher share of profits from its associate.

Declares dividend. The company has declared a second interim singletier dividend of 10 sen per share for FY15, bringing full-year total dividend for FY15 to 17 sen per share. This translates into a decent dividend yield of 5%. In FY14, the company declared a final single-tier dividend of 7 sen. Hence, there is a possibility of a final dividend for FY15 as well.

Forecasts and risks. We raise our FY16/FY17 earnings forecasts by 30.2%/36.3% respectively, assuming a higher take-up rate for its future launches. We also introduce our FY18 forecasts. Risks to our forecasts include a lower take-up rate and higher-than-expected property development expenses.

Maintain BUY with a higher TP of MYR5.60. We continue to like SHL for its: i) prudent management, ii) good earnings visibility, with the MYR1.5bn GDV Goodview Heights project continues to be its next earnings driver, iii) higher margins arising from lower land cost and better cost control, as it supplies its own clay bricks and granites, and iv) solid balance sheet with total net cash of MYR214m as at end-Mar 2015. Maintain BUY with a higher TP of MYR5.60 (from MYR5.00). We apply a lower FY16F P/E of 12.1x (FY16F ex-cash P/E: 9.4x), from 14.0x previously, in view of softer property market sentiment.

Source: RHB Research - 28 May 2015