• Keep BUY with unchanged MYR1.20 TP, 33% upside and c.6% FY25F yield. Tambun Indah’s 3Q24 results missed our and Street’s estimates – due to lower-than-expected new property sales. After a strong 1H24 with MYR133m in new property sales, the group only recorded MYR14.8m new sales in 3Q24, but is still well ahead of management’s full-year sales guidance of MYR150m. We expect the sales momentum to improve as the take-up rate for Botanic Villa increases, as well as from the line-up of new projects to be launched in FY25.

• 3Q24 results review. 3Q24 revenue fell by 16% YoY (-32% QoQ) from lower new property sales. As a result, PBT dropped 34% YoY (-43% QoQ) and core profit similarly fell 41% YoY (-44% QoQ). YTD, earnings improved by 22% from a lower base as it incurred a provision for foreseeable loss for a low-cost housing project last year.

• Slower sales. 3Q24 new property sales hit MYR14.8m vs MYR44.5m in 2Q24 and MYR88.1m in 1Q24, bringing the 9M24 total to MYR147.4m (9M23: MYR147.5m). TILB’s two biggest ongoing projects – Botanic Villa (GDV: MYR304m) and Dahlia Garden (GDV: MYR122m), with a take-up rate of 60% and 71% – accounted for 70% of the total revenue YTD, and should continue to underpin earnings growth in FY25. Botanic Villa’s take-up rate is mostly unchanged QoQ as the group applies for the release of the bumiputera lots. Three of the group’s ongoing projects already have take-up rates of over 98% – Aster Villa, Ambay Garden, and Pearl Impiana, while Mutiara Indah has a take-up rate of 90%. The group’s unbilled sales amount to MYR101m (Dec 2023: MYR123m).

• New launches in FY25. While TILB continues to focus on its existing projects for FY24, we should see new project launches in FY25 as three projects are nearing completion. The group plans to launch Aralia Park – a 21-storey high- rise development with an estimated GDV of MYR148m – and a freehold project in Bukit Mertajam (GDV: MYR52m).

• Forecasts. We lower our FY24-26F earnings estimates by 10%, 4%, and 3% after adjusting our sales assumption. Our TP is premised on a 60% discount to RNAV. Key risks include lower-than-expected sales momentum, and delays in project launches.

Source: RHB Securities Research - 26 Nov 2024