Hua Yang’s 2QFY16 results came in within expectations. Maintain BUY and RNAV-based TP of MYR2.16 (19% upside), given its undemanding P/E valuation and decent dividend yield of above 7%. New sales continue to remain soft at only MYR175m for 1HFY16 due to the lack of new launches. We believe its MYR500m new sales target for FY16 maybe a tall order, should the current weak market sentiment persist.

Within expectations. Hua Yang’s 2QFY16 (Mar) net profit of MYR28.7m (+10.4% YoY, -4.0% QoQ) brought 1HFY16 core profit to MYR58.6m (+17.3% YoY), making up 53% of our FY16 forecast. Earnings during the quarter were mainly contributed by progress billings from existing projects such as One South, Metia Residences and Sentrio Suites as well as from the completion of several projects including Flexis@One South. No dividend was declared for the quarter.

Slow 1H sales. Unsurprisingly, Hua Yang’s new sales figure continuesto remain weak given the lack of launches in 2015, as demand remainssluggish post the goods and services tax (GST) and given current macroeconomic headwinds. The company recorded total sales of MYR93.1m for 2QFY16, bringing 1HFY16 sales to only MYR174.8m (1HFY15: MYR192.2m). Although management has maintained its total new sales target of MYR500m for FY16, we note that it could be a tall order for Hua Yang to meet this target amid the persistent weak market sentiment. 2QFY16 unbilled sales also declined to MYR607.2m (1QFY16: MYR661m) due to the lack of new launches.

Earnings forecasts. We make no changes to our earnings forecasts,pending a briefing later today.

Maintain BUY. Our TP is maintained at MYR2.16, based on an unchanged 30% discount to RNAV (in line with its peers’ discount of 20-30%). Although there is still no re-rating catalyst for the property sector for now, we keep our BUY call on Hua Yang, given its undemanding valuation of 4.2x FY16 P/E and decent dividend yield of above 7%