• Maintain NEUTRAL and MYR0.23 TP, 12% expected total yield, based on a 75% discount to RNAV. FY19 earnings missed expectations, which comes as no surprise, given the lack new project launches since FY18. We are only cautiously optimistic of I-BHD despite the promising outlook of its i-City Shopping Centre, given the further delay in the launching of Hills 11 and 12 Residences amid the COVID-19 outbreak and an unexciting property market environment.
• Missed expectations… again. FY19 core net profit was MYR25.9m (-56% YoY), below expectations – at 91% of our full-year estimate. Revenue plunged 54% YoY, which comes as no surprise, given the expected abysmal performance of the property development segment that had been impacted by a lack of new launches since 2018. 4Q19 saw new sales of only MYR5.3m, which is lower than the MYR17m registered in 4Q18, and MYR13 and MYR12m registered in 3Q19 and 2Q19. FY19 full-year sales was MYR43.3m, a significant drop from the MYR204m reported for FY18. Compared to 3Q19’s MYR112.9m and 2Q19’s MYR123.5m, unbilled sales as at end-2019 stood at a paltry MYR97.2m. DPS for FY19 was 0.73 sen vs 1.66 sen in FY18.
• Going full throttle in FY20? Largely unchanged since 2Q19, Hill 10 Residence’s (launched FY17) take-up rate as at Dec 2019 stood at 93%, while the take-up rate for 8Kia Peng (launched FY16) still stands at c.26%. Initially slated for completion at the end of FY19, 8Kia Peng is now expected to be completed sometime in 1H20. Although the slow progress is worrying, construction progress for 8KiaPeng has reached around 87% as at Dec 2019. Management is maintaining a cautious stance on the launch of Hill 11 (GDV: MYR278m) and Hill 12 (GDV: MYR281m) Residences in the new year amid the COVID-19 outbreak. As such, the launch of Hill 11 Residence has been delayed to 2H20 from the initial target of 1H20, while the launch of Hill 12 Residence would be dependent on the sales progress of Hill 11.
• Outlook for FY20. Aside from the targeted launches and completion of 8Kia Peng expected for this year, I-BHD is set to experience a decent 2020. In tandem with Selangor’s vision to make i-City the heart of the state’s Golden Triangle, we believe the group’s efforts to transform the REIT to a wholesome township may prove successful in the new year. With Central i-City Shopping Centre (total NLA: c.1m sqf, MYR8 psf), targeting to pull in shopper traffic by as much as 1m/month and the Corporate Office Tower in Plot 2 (GDV: MYR230m, completed in Dec 2019) expected to attract office crowds into the vicinity, we are cautiously optimistic of its value-unlocking potential.
• Cut earnings, maintain TP. As results missed, we cut FY20F-21F earnings by 11-13%, in view of the further delay in launches of Hill 11 and Hill 12 Residences amid market muteness and COVID-19. We also introduce FY22F earnings of MYR36m. Our TP is based on a 75% discount to RNAV

Source: RHB Securities Research - 28 Feb 2020