We maintain our BUY call on Hua Yang, with our TP revised to MYR2.20 (20% upside) after imputing the incremental earnings from its Jurulandbank acquisition. During the briefing, management has guided that sales will continue to remain soft, although its earnings growth and dividend payout will still be intact. We believe that prospects will be better in FY17, when it launches its new Puchong West project.

Soft outlook over the next 6-9 months. During the briefing, management has guided that sales could likely remain soft over the next 6-9 months, although it still maintained its MYR500m FY16 (Mar) new sales target. W e note that there could be some downside risk to this as Hua Yang is pushing most of its new launches to 4QFY16, including the maiden launch of its Mines South development. Sales of ongoing projects have taken a hit from high loan rejection rates (about 50%), thus some of its high-rise projects have only managed to chalk up less than 50% of sales. That said, we note that its landed residential projects outside of the Klang Valley have seen better take-up rates, with some projects fully sold. Despite the soft outlook, management believes that it will be able to sustain its earnings growth and at least match its dividend payout in FY16.

Opportunities beyond FY16. We note that Hua Yang is expanding its presence in mainland Penang through its Bukit Mertajam land injection and its newly-proposed acquisition of two pieces of freehold land in Juru. Hua Yang is acquiring total 9.5 acres of land parcels for a totalconsideration of MYR21.7m (or MYR52.50 psf), which we believe is fair given that the land is located near a mature township and given itsproximity to Juru Auto City and AEON Big Hypermarket. The GDV for the land is estimated at MYR180 m and will comprise landed and high-rise properties. The company is also planning to launch the first phase of its Puchong West project (total GDV: MYR1.35bn) by FY17.

Maintain BUY. We make no changes to our FY16-18 earnings forecasts. Our TP is raised slightly to MYR2.20 (from MYR2.16) after imputing the GDV from the Juru land into our RNAV calculation. Our TP is based on an unchanged 30% discount to RNAV. Although there is still no re-rating catalyst for the property sector for now, we continue to rate Hua Yang with a BUY, given its undemanding valuation of 4.2x FY16 P/E and decent dividend yield of above 7%.