MYR136m 1H14 net profit (-57% YoY) below expectations.
6M14 locked-in sales were weak at MYR439m (-74% YoY); management cuts 2014 sales target by -38% to MYR2b.
We cut our FY14/15/16 earnings forecasts by 12%/20%/10% and TP to MYR2.10 (-2sen); maintain HOLD.
Given the challenging property market outlook, management has cut its 2014 sales target to MYR2b (-38%) on the back of MYR3.1b worth of new launches including the Australian development in La Trobe Street (MYR2.1b), Melbourne.
We cut our earnings forecasts to factor in a lower sales assumption of MYR1.8b for FY14 but higher land sales gain, as guided by management. We have also included its Australian project which is expected to contribute significantly from FY16 onwards. All in, our RNAV is lowered slightly to MYR4.13(-1sen). Our TP pegs UEMS at an unchanged 0.51x P/RNAV (-0.1x below its historical means).
Source: Maybank Research - 26 Aug 2014
6M14 locked-in sales were weak at MYR439m (-74% YoY); management cuts 2014 sales target by -38% to MYR2b.
We cut our FY14/15/16 earnings forecasts by 12%/20%/10% and TP to MYR2.10 (-2sen); maintain HOLD.
What’s New
UEMS’ 2Q14 net profit of MYR74.5m (+21% QoQ, -31% YoY) lifts 1H14 net earnings to MYR136m (-57% YoY), making up just 24-25% of our and consensus full-year estimates. The sharp 57% YoY decline in 1H14 earnings was due to the lack of land sales and cost revision that relates to the recognition of GST financial impact.What’s Our View
1H14 locked-in new property sales of MYR439m accounts for just 14% of UEMS’ initial sales target of MYR3.2b for 2014 (16% of our sales forecast of MYR2.67b). Apart from the poor take-up of 20% at the Almas project and the backdating of some of its Jan 2014 sales to Dec 2013, 2Q14 property sales were also impacted by the deferment of new launches worth MYR3.1b in total GDV to 2H14. Unbilled revenue stood at MYR3.04b at June 2014, 1.5x of our FY14 revenue forecast.Given the challenging property market outlook, management has cut its 2014 sales target to MYR2b (-38%) on the back of MYR3.1b worth of new launches including the Australian development in La Trobe Street (MYR2.1b), Melbourne.
We cut our earnings forecasts to factor in a lower sales assumption of MYR1.8b for FY14 but higher land sales gain, as guided by management. We have also included its Australian project which is expected to contribute significantly from FY16 onwards. All in, our RNAV is lowered slightly to MYR4.13(-1sen). Our TP pegs UEMS at an unchanged 0.51x P/RNAV (-0.1x below its historical means).
Source: Maybank Research - 26 Aug 2014
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