• Stay NEUTRAL, but with a lower Street-low TP of MYR0.41 from MYR0.47, 2% downside with 3% yield. I-Bhd’s earnings came below estimates. Meanwhile, new sales continued to decelerate, due to the lack of launches. We trim FY19-20F earnings by 13-14% from the delay in launches, adjustment on MFRS 15 and higher other expenses arising from higher commission fees. Our new TP is based on a higher discount to RNAV of 70% (from 65%), due to the uncertainty on future launches.

• FY18 net profit of MYR58.8m came in below our expectations due to lower-than-expected contributions from the Hill 10 and 8Kia Peng projects. FY18 revenue fell 17.6% YoY as the Plot 2 development has been completed – with Liberty, Parisien and Hyde handed over in 3Q18. Meanwhile, FY18 net profit declined at a slower 7% YoY, due to a lower effective tax rate.

• Sales remained sluggish. In 4Q18, I-Bhd only booked c.MYR17m in new sales (vs MYR 20m in 3Q17), mostly from 8Kia Peng. For FY18, it recorded cumulative new sales of MYR183m, vs its target of MYR280m. With slow sales, 4Q unbilled sales declined to MYR149m (-7% QoQ).

• Pipeline launches in 2H19. With the completion of the Plot 2 development, we believe the group’s performance over the near term will be heavily dependent on 8Kia Peng and Hill 10. These are the only property development projects left for the group. Management targets to launch Hill 11 residence (GDV: MYR278m) and Hill 12 residence (GDV: MYR281m) in 2H19 after the completion of Central Plaza Mall at i-City.

• Hill 10 almost fully booked. Hill 10 residence, the only project launched last year, achieved an encouraging take-up rate of 94%. Despite its hefty prices, we believe the good take-up rate is mainly attributed to the upcoming mall – Central Plaza Mall.

• 8Kia Peng sales still tepid. 8Kia Peng was launched in early FY16, and the take-up rate still slow, at 23% (vs 22% in the previous quarter). Given the slow take-up, construction progress has been sluggish as well – and is only 59% completed (targeted completion by end-2019).

• Central Plaza Mall is a 40:60 joint project with Thai retail property developer, Central Pattana (CPN TB, BUY, TP: THB93.00). The 940,000 sqf NLA mall is nearly completed. Management expects to hold a soft launch of the mall on 23 Mar, and a grand opening on 27 Apr.

Source: RHB Securities Research - 28 Feb 2019