Key takeaways from the 2Q24 results briefing include:

Record launches worth RM1.6bn were rolled out in 2Q24

In 2Q24, PCB reported a significant surge in new property sales, achieving RM537mn — a 65% YoY and 432% QoQ increase. This strong performance lifted 1H24 sales to RM638mn, reflecting a 3% YoY growth. The impressive sales results were driven by a substantial increase in property launches, totalling RM1.7bn in 1H24, with RM1.6bn launched in 2Q24 alone, compared to RM820mn in 1H23.

A key contributor to PCB's strong sales in 1H24 was The Ashwood project, which was launched in May 2024 in the prestigious U Thant enclave in Kuala Lumpur. This development, featuring high-rise condominiums, duplexes, and low-rise villas, achieved a 46% take-up rate and accounted for 61% of the group's total sales in 1H24. With current bookings, The Ashwood is already 70% sold, and PCB remains confident that the robust sales momentum will continue.

RM700mn New Launches in 2H24 to Drive RM1.4bn in Sales Target

Although the take-up rate for ongoing projects stands at 57%, this is attributed to the large volume of 2Q launches. PCB plans to launch properties with a GDV of RM700mn in 2H24, including Greenwoods Salak Perdana Townhouses, Berkeley Uptown (Phase 2) in Klang, and Utropolis Batu Kawan Serviced Apartments and Retail. Given the strong market response, PCB is wellpositioned to achieve its RM1.4bn sales target for the year, with 1H24 sales already accounting for 46% of this target.

Temporary Earnings Dip Due to Opening of New Co-labs Spaces

Co-labs Coworking saw a 49% YoY revenue growth in 1H24, reaching RM9.2mn, driven by strong performance from its Tropicana Gardens location and contributions from new spaces at Ken TTDI and The Five. Despite this, the division posted a loss before tax of RM0.2mn, down from a RM0.6mn profit in the previous year, primarily due to startup losses from the new spaces. Sequentially, the co-working segment rebounded in 2Q24, achieving a profit before tax of RM0.3mn, thanks to improved occupancy rates at the new locations and solid performance from existing spaces.

Co-labs Coworking has expanded its footprint by 45% year-on-year to 167,000 square feet across seven locations in the Klang Valley. This expansion led to a decline in average occupancy from 81% to 70%. Management remains focused on increasing occupancy rates, particularly for the newer spaces, with a target to restore average occupancy to 80% by year-end.

Co-Working Business Eyes IPO

Looking ahead, Co-labs Coworking is gearing up to expand further by opening its eighth location in 4Q24, adding 20,000 square feet to its portfolio. This move aligns with its strategy to grow its presence in the Klang Valley. Over the next two years, PCB plans to broaden its co-working footprint beyond Klang Valley, targeting markets in Penang and Johor, with an ambitious goal to increase its managed space to 300,000 square feet across Malaysia from 167,000 square feet currently. Additionally, the group is contemplating an IPO for the Coworking segment within the next three to five years.

Impact

Maintain FY24-26 earnings forecasts.

Valuation & Recommendation

We maintain our Buy recommendation on PCB with an unchanged TP of RM1.68/share, based on a CY25 P/Bk multiple of 0.7x.

Source: TA Research - 30 Aug 2024