• 9M24 core profit of RM139m (+30% YoY) met our and consensus expectations

• 3Q24 achieved another record-high quarterly sale of RM349m– on track to meet its RM1.2bn internal sales target for full-year 2024

• Maintain BUY rating with unchanged RNAV-derived target price at RM2.00

Result within our expectations

Lagenda recorded revenue of RM755m (+27% YoY) and core net profit of RM139m (+30% YoY) in 9M24, respectively. This was on the back of strong sales momentum and accelerated progress billings from ongoing projects, including Darulaman Lagenda, Lagenda Puncak Warisan, and Lagenda Suria. 9M24 EBITDA margin were weaker at 27% (-1.4ppts) due to the involvement in a substation construction project at the Teluk Intan township. 9M24 core earnings was partly lifted by lower effective tax rate. Overall, 9M24 earnings are in line with our and consensus’ expectations, representing 69–70% of the full-year estimates. The confirmed sales for 9M24 amounted to RM869m (+9% YoY), while bookings in hand stood at RM307m, putting the company on track to meet its internal property sales target of RM1.2bn.

Record-high sales in 3Q24

3Q24 revenue rose 15% QoQ to RM283m, driven by better construction progress across its ongoing projects, including Darulaman Lagenda and Lagenda Suria. The EBITDA margin declined by 5ppts to 24% during the quarter due to the additional construction work related to the substation project, which led to weaker core earnings of RM48m (-2% QoQ). Lagenda achieved a record-high quarterly property sales of RM349m in 3Q24 (+17% QoQ), reflecting its success in expanding into Johor, Kedah, Selangor, and Pahang. We expect 4Q24 earnings to remain strong, supported by high unbilled sales of RM835m (+12% QoQ).

Maintain BUY with TP of RM2.00

We reiterate our BUY rating and unchanged RNAV-derived target price of RM2.00, based on a 20% RNAV discount supported by strong demand for its multi-state expansion, particularly in Johor and Kedah. We like Lagenda for its niche focus on affordable housing and its attractive 7% 2025E dividend yield. Key risks to our BUY call include higher building material prices and lower-than-expected property sales.

Source: Philip Capital Research - 26 Nov 2024