Tropicana’s  1HFY14  results  came  in  within  expectations.  2QFY14 earnings  were  boosted  by  total  land  sales  gain  amounting  to MYR58.6m. Its  new  sales of MYR935m for 1HFY14 (1QFY14: MYR300m) included  the  maiden  contribution  from  its  newly-launched  Tropicana Heights.  Earnings going forward  should  be underpinned  by its strong unbilled sales of MYR2.69bn and ongoing land sales. Maintain BUY.

Within expectations. Tropicana Corp’s (Tropicana) 2QFY14 net profit of MYR89.5m  (>100%  y-o-y,  >100%  q-o-q)  brought  1HFY14  net  profit  to MYR97.1m (+18.2% y-o-y), broadly  in line with our  and  consensus  fullyear  estimates.  Property  development  revenue  was  sustained  by  its ongoing projects such as Tropicana  Gardens and Tropicana Metropark (Klang Valley), as well as Tropicana Danga Bay (Johor).  Earnings were further boosted this quarter by the gain on land sales in Jalan Ampang and Jalan Kia Peng amounting to MYR58.6m. We expect earnings going forward  to  remain  stable,  underpinned   its  strong  unbille d  sales  of MYR2.69bn (1QFY14: MYR2.39bn).

More  projects  to  be  rolled  out.  Tropicana  recorded  strong  sales  of MYR935m  for  1HFY14  (1QFY14:  MYR300m),  on  track  to  meet  our forecast  of MYR1.7bn.  The sales were mainly attributed  to the maiden contribution from Tropicana Heights in Kajang  (launched in 1QFY14) as well  as  the  ongoing  sales  in  Tropicana  Metropark.  Management  has guided  for  MYR2.61bn  of  GDV  to  be  rolled  out  in  2HFY14.  The  main project  is  The Residences in Jalan Ampang, which will be launched  in 4QFY14  (GDV: MYR832m).  The 350-unit serviced apartment  is part of the W Hotel  mixed  development  project,  and  Management  has  guided for ASP  of MYR2,000-2,500 psf. Other new launches include  phase oneof Tropicana Aman  (GDV:  MYR381m).  The company is also hoping toseal  more  land  disposal  deals  over  the  next  12  months,  which  could potentially  bring  in  about  MYR316m  in  net  gain.  This  includes  the recently-signed  agreement  with  Agile  Property  (3383  HK,  BUY,  FV: HKD7.40) for the purchase of Tropicana’s Bukit Bintang land.

Maintain  BUY.  We  maintain  our  earnings  forecasts  and  MYR2.15  FV, based  on  a  30%  discount  to  RNAV.  The  risks  to  our  view  include:  i) slower-than-expected  sales,  and  ii)  delays  in  the  completion  of  future land disposals.

Source: RHB