UOAD’s  2Q13  results  came  in  within  expectations.  The  sequential decline  in  earnings  was  largely  due  to  the  smaller  mount  of  en  bloc sales  value  in  2Q.  New  sales  in  1H13  reached  MYR1.3bn.  Sales  at Scenaria are slowing down, but given that South View will be launched in  October,  UOAD  should  be  on  track  to  achieve  our  sales  forecast  of MYR2bn. Maintain Neutral, but with a lower fair value of MYR2.35. 
 
- Within  expectations.  UOAD’s 2Q13 results came in within our and market  expectations.  Key  projects  that  contributed  to  revenue  include One  @  Bukit  Ceylon,  Desa  Green,  Le  Yuan  Residence,  Vertical  Office Suites and Scenaria. The sequential decline in earnings was largely due to the smaller amount of en bloc sales value during the quarter. In 1Q13, UOAD  sold  an  office  building  in  Horizon  Ph.  II  valued  at  MYR183m, whereas  it  only  sold  a  smaller  office  block  in  Horizon  Ph.  1  for  about MYR45m in 2Q13.  

- MYR1.34bn  sales  in  1H13.  New  property  sales  in  1H13  amounted  to MYR1.34bn.  There  were  no  new  launches  in  2Q,  with  sales  mainly contributed  by  Desa  Green,  Scenaria  Block  1  and  other  ongoing projects. In the coming months, UOAD plans to release only one project –  South  View  Residence  (MYR600m  in  GDV)  in  Sept/Oct.  This development  comprises  1,204  units  of  freehold  residences  located  at Kerinchi,  with  an  indicative  pricing  of  about  MYR700  psf.  Sales  at Scenaria are slowing down with Block 2 achieving a take-up rate of only 15-20%  vs Block 1’s 70%.  However,  with  the  recent  sale  of  two  small office blocks at  Kencana Square worth MYR110m, UOAD should be on track to meet our sales forecast of MYR2bn for the year.

- Forecasts.  We  make  no  changes  to  our  earnings  forecasts.  Unbilled sales currently stand at MYR1.2bn, up from MYR1.1bn in 1Q13.

- Maintain  NEUTRAL.  We  had  expected  a  moderate  slowdown  in property  sales  as  a  result  of  the  unwinding  of  liquidity  when  we downgraded  the  sector  to  NEUTRAL  in  early  July.  We  maintain  our NEUTRAL rating on UOAD, as we do not see any near-term catalysts at this juncture. Our FV is lowered to MYR2.35 (from MYR2.48), based on a  larger  25%  discount  (from  20%)  to  RNAV,  as  the  impact  on  the property  sector  could  worsen,  coupled  with  the  challenging  economic outlook in the regional countries.

Source: RHB