Results

• Revenue Upbeat but Overall Decline. Tambun Indah Land (TIL) recorded its 2Q23 results with an improved revenue of RM51.0m (+7.4% QoQ, -6.7% YoY) but a slumped net profit at RM6.1m (-43.5% QoQ, -63.2% YoY) after being dragged by lower revenue recognitions from projects that are close to completion and low number of new project launches.

• Margins still low. The slump in margins is within our expectations where earnings experienced another decline with EBIT at RM8.3m (-47.5% QoQ, -64.0% YoY), further dragging the PBT and NP down to RM7.3m (-50.7% QoQ, -67.3% YoY) and RM6.1m (-43.5% QoQ, -63.2% YoY) respectively due to overall lower revenue and an increase in COS. We continue to expect margins to be affected throughout 2023.

Comment

• Unbilled Sales reduced. The Group’s unbilled sales descended to RM70.8m in 2Q23 from RM74.2m in the previous quarter. A newly launched project that is in its early stages of construction this quarter has boosted the new property sales for the quarter are at RM46.3m (1Q23: RM44.4m; 2Q22: RM29.5m) which is also on par with our expectations of RM150m new property sales for FY23.

• Adequate Landbank on Hand. The Group currently holds RM307.3m worth of land held for property development which is a slight increase from the previous year’s quarter 2Q22 of RM307.1m.

• Growing Cash Pile. Tambun is currently holding a total cash and bank balance amount of RM90.8m plus an addition of RM115.8m worth of short-term funds, in total they currently represent 51.1% of its total market cap.

• Slow and Steady. Tambun launched one new project in 2Q23 which is the Dahlia Garden with a GDV of RM107m that will start to contribute to the Group’s financials. The Group remains conservative with its upcoming project and we expect more projects to be announced in 2H23.

Earnings Outlook/Revision

• We make no changes to our forecast.

Valuation & Recommendation

• Maintain HOLD with a target price of RM0.88. Our target price is pegged at a PE multiple of 7.0x to the 2024F EPS, which is at -1 STD to its 5-year mean PE and is also lower than the property index PE as we anticipate more launches in 2H23.

Source: JF Apex Securities Research - 29 Aug 2023