RHB Investment Research Reports

Tambun Indah - Earnings Missed From Lower Margins

Publish date: Thu, 29 Feb 2024, 02:55 PM
0 3,541
An official blog in I3investor to publish research reports provided by RHB Research team.

All materials published here are prepared by RHB Investment Bank Bhd. For latest offers on RHB Invest trading products and news, please refer to: http://www.rhbinvest.com

RHB Investment Bank Bhd
Level 3A, Tower One, RHB Centre
Jalan Tun Razak
Kuala Lumpur

Tel : +(60) 3 9280 8888
Fax : +(60) 3 9200 2216
  • Maintain NEUTRAL and TP of MYR0.91, 1% upside. Tambun Indah’s 4Q23 results came in below with expectations from lower-than-expected margins. New sales of MYR98.8m in the quarter led to a full-year property sales of MYR246m, exceeding management’s initial target of MYR150m. We keep our call on the stock as management’s conservative launch plans should limit the upside to earnings.
  • 4Q23 results review. Revenue increased by 19.7% QoQ (+7% YoY) mainly due to the higher property sales as TILB launched a new project, Vila Botani, in the quarter. QoQ growth in PBT was lower at 5.5% as recently launched projects were still at the initial stage of construction. Core net profit dropped by 13% QoQ (-7.7% YoY) from a higher effective tax rate of 36.6% in 4Q23 due to certain non-tax deductible expenses.
  • New launch driving up sales. 4Q23 new property sales of MYR98.8m accounted for 40% of FY23 sales of MYR246m. The sharp rise in 4Q was due to the launch of Vila Botani (take-up rate: 28%), which has an expected GDV of MYR301m. The take-up rate for its ongoing projects dropped to 62% from 80% in 3Q23 following the aforementioned launch. On specific projects, the take-up rate for Mutiara Indah saw the biggest jump QoQ to 64% from 46%, Aster Villa’s ticked up to 95% (3Q23: 94.6%) while Pearl Impiana increased to 77% (3Q23: 75%).
  • FY24 sales target at MYR150m. Despite widely beating its sales target in FY23, management is keeping its sales target at a conservative MYR150m for FY24. Nevertheless, the six ongoing projects with a total GDV of MYR499.8m and unbilled sales of MYR122.9m should support earnings in the next 2-3 years. Having just launched Vila Botani in end-2023, its sales should continue to flow to FY24, management is conservative on its pipeline launches in this FY, providing a rough guidance of >MYR100m GDV planned for the year.
  • Forecasts. We lower our FY24F-25F earnings by 4-7% after adjusting our cost assumptions, and we introduce our FY26F earnings of MYR52m. We expect gross margin to gradually improve, as FY23 margins were impacted from the provisions made for a low-cost housing project.
  • Valuation. Our TP is based on a 70% discount to RNAV, with a parity ESG premium or discount inked in, as TILB’s ESG score of 3.0 is in line with the country median.

Source: RHB Research - 29 Feb 2024

Related Stocks
Market Buzz
Be the first to like this. Showing 0 of 0 comments

Post a Comment