UEM Sunrise's (UEMS) 3QFY24 net profit came in stronger at RM23.7m (>100% YoY, +23.7% QoQ) which is largely within our and consensus expectations. We expect 4Q to maintain the earnings momentum as billings from its new projects pick up speed. Albeit Group 9MFY24 net profit only constituting about 64% and 59% of our and consensus full-year estimates, we deem it as in line as we expect earnings to be stronger sequentially. The Group has clinched 9MFY24 pre-sales of RM929m or already 93% of its RM1bn full-year target. Meanwhile, unbilled sales improved slightly to RM2.89bn (from RM2.7bn in 2QFY24), ensuring revenue visibility until FY27. All told, we make no changes to our earnings estimates. Valuations are still rich in our view and hence, we maintain our Underperform call and fair value of 70sen, pegged at 0.5x to book value.

• 3QFY24 revenue rose 80% QoQ to RM369.3m, underpinned by ongoing projects such as Residensi AVA at Kiara Bay, The MINH in Mont'Kiara, The Connaught One in Cheras, and Aspira LakeHomes in Iskandar Puteri. Additionally, land sales further bolstered performance, with RM113m recognized during the quarter following the fulfilment of conditions precedent for land sales in Iskandar Puteri, Johor. As such, profit after tax and non-controlling interests (PATANCI) climbed 22% QoQ to RM23m mainly due to improved operational efficiencies, reduced financing costs and higher contributions from joint ventures and associates.
• Sold RM929m in 9MFY24, or already 93% of FY24 sale target of RM1bn. UEMS has exceeded its launched Gross Development Value (GDV) target of RM800m, driven by successful introduction of projects in high-demand locations. These include Aspira Hills (Phase 1), DiReka Square, and Aspira LakeHomes (Phases 4, 5 and 6) in Iskandar Puteri, collectively achieving RM499m in GDV. Unbilled sales grew to RM2.89bn, offering revenue visibility for the next 36 months. Separately, it also reduced its completed inventories from RM135.8m a year ago to about RM98.6m in the current quarter.

Source: PublicInvest Research - 22 Nov 2024