2Q15 results came in within our and market expectations. Maintain NEUTRAL with a lower MYR2.09 TP (12% upside), as we raise our discount to RNAV in view of the macroeconomic headwinds/political risks. New 1H15 sales amounted to MYR504m, on track to reach our MYR1.1bn FY15 sales target. We maintain our earnings forecast, and expect the completion of Vertical and Scenaria to boost 2H15 earnings.

Within expectations. UOA Development’s 2Q15 results came in line with our and consensus estimates. Earnings during the quarter werepartly dragged down by higher marketing, administrative and operating expenses.

MYR358m new sales in 2Q15. The company achieved 2Q15 new sales of MYR358m (1Q15: MYR146m), bringing 1H15 new sales to MYR503.8m. The key contributors were Vertical Corporate Tower B (MYR145.5m), Southbank Residence (MYR114.9m) and Scenaria (MYR80.7m). Note that, Vertical Corporate Tower B is stratified for sale and the response has been encouraging. Tower A, meanwhile, is to be kept as an investment property asset and partially occupied by the UOA Group. The take-up rate for Desa Sentul Phase 1 and SouthBank Residence has improved to 96% and 86% from 84% and 66%respectively in the last quarter. We maintain our sales forecast of ~MYR1.1bn for FY15, as Kepong V Phase 1 (GDV: MYR1bn) and Suria @ North Kiara (GDV: MYR120m) are slated for launch in 2H15. UOA Development is also having a preview for its Setapak project (GDV: MYR230m) currently.

Forecast. We maintain our earnings forecasts. 2H15 net profit is likely to come in stronger, given that Vertical Office Suites and Scenaria are expected to be completed in the coming quarters. Unbilled sales remained resilient at MYR1.8bn (1Q15: MYR1.7bn).

Maintain NEUTRAL. We maintain our NEUTRAL rating on the stock. As market sentiment has deteriorated severely following: i) the selldown in the equity market, ii) the weakening currency, and iii) political instability, we lowered our TP to MYR2.09 (from MYR2.45), based on a larger discount to RNAV of 45% (from 40%). The macroeconomic environment remains unfavourable for the property sector.