Despite the weak property market, we still think the potential asset monetisation exercise is the share price catalyst. Maintain BUY with a lower MYR2.32 TP (50% upside) to reflect the more challenging property market conditions. 2015 new property sales amounted to MYR430.4m (from MYR328m in 2014), exceeding management’s expectation. We conservatively expect MYR370m sales for 2016.

MYR124m new sales in 4Q. 4Q sales increased sharply from MYR68m in 3Q, bringing full-year sales to MYR430.4m, surpassing management’s target of MYR400m. Since its launch in 3Q15, Utropolis Block 5 has achieved a take-up rate of 50%. The maiden Salak Perdana project (Phase 1 Greenwoods with MYR58.4m GDV) has sold 18% since its launch in 4Q, but the latest take-up rate has risen to 36%. On the education side, total number of students is largely unchanged at 8,251 vs 8,300 in 3Q, due to some outgoing graduated students. Pipeline launches. Launches are selective in view of the weak property market conditions. Two new projects will be rolled out, including the Section 13 Petaling Jaya project (GDV: MYR701m) and university metropolis development in Batu Kawan (GDV: MYR1.368bn), which concept will mirror the Utropolis Glenmarie project. We are positive given the locations of both projects. Forecasts. We trim our FY16-17 earnings forecasts by about 7% as we update the latest financial numbers. Unbilled sales declined slightly to MYR367m from MYR400m in 3Q.

Maintain BUY. Amid these weak market conditions, we raise our property division RNAV discount to 45% (vs 40%), which lowers our SOP-based TP to MYR2.32 (from MYR2.40) with 20% holding company discount. Despite the sluggish environment, the potential asset monetisation exercise would be the key share price catalyst.

FY15 broadly in line. Both property development and education divisions’ revenue grew 13% YoY, but earnings from the education segment were dampened by higher depreciation charges and interest costs arising from the new Utropolis campus in Glenmarie in 2015. A 5.75 sen single-tier final dividend was declared (vs 5 sen in 4Q14). Key risks are delays in launches and worse-than-expected market conditions.

SWOT Analysis

Source: RHB Research - 25 Feb 2016