In 3QFY23, UOAD reported core net profit (excluding forex and impairment) of RM56.8m (-40% yoy, -14% qoq), taking 9MFY23 core net profit to RM169.7m (+1% yoy). This accounted for 85% of our FY23 estimates and 78% of Bloomberg consensus’ estimates. The discrepancy to our estimates was mainly due to better-than-expected hospitality segment income and rental income. 9MFY23 revenue was lower by 14% yoy on lower progressive recognition from the ongoing developments. No dividend was declared.
In 3QFY23, the group achieved new property sales of RM159m, taking 9MFY23 property sales to RM462m (vs. RM480m in 9MFY22). This was supported by Aster Hill (RM154.5m), the Goodwood Residence (RM145.3m), Laurel Residence (RM120.8m) and United Point Residence (RM30.6m). We believe UOAD is on track to meet our property sales forecast of RM608m in FY23F, on the back of existing developments.
As at end-Sep 23, unbilled sales stood at RM322.8m, which translates to c.0.7x cover ratio, or less than a year’s visibility. However, this is higher than RM181m unbilled sales as at end-Sep 22. UOAD has guided that the three projects with a total estimated GDV of RM1.3bn — namely, Desa 3, Bamboo Hill Residence, and two blocks of office towers in Bangsar South, which were slated to be launched in 2H23 - has been delayed to 2024 instead. Currently, there are two ongoing developments - Laurel Residence (64% take-up rate) and Aster Hill (33% take-up rate for Block A and 8% take-up rate for Block B).
We raise our FY23-25F core net profit estimates for UOAD by 6.5-13.5% after imputing higher hospitality segment contributions and rental income. TP slightly raised to RM1.68 (on higher EPS forecast), still based on an unchanged 0.7x FY24F P/BV (five-year mean). However, we downgrade the stock to Reduce from Hold previously, as we believe the positives have already been priced in. Current P/BV valuation has already exceeded its five-year mean level of 0.7x, which is also higher than the sector average of 0.5x. It is also trading at 18.5x FY24 P/E, above the industry average of 15x. De-rating catalysts are lower property sales on delayed launches and low take-up rates. Upside risks include strongerthan-expected new sales, and higher-than-expected dividend payout.
Source: CGS-CIMB Research - 28 Nov 2023
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Created by sectoranalyst | Sep 27, 2024