Tropicana  Corp's  FY13  earnings  came  in  stronger  than  expected, attributed  to  higher  revenue  from  property  development  as  well  as higher  land  sales  in  4Q13.  Earnings  growth  prospects  remain favourable,  underpinned  by  its  strong  unbilled  sales  of  MYR2.18bn. Management is targeting sales of above MYR2bn for FY14,  buoyed by some MYR3.2bn in new launches. Maintain BUY and FV of MYR2.19.

• Above expectations.  Tropicana  Corp  (TRCB)  FY13 net profit  of about MYR188.2m  (11.2%  y-o-y)  was  slightly  above  our  estimate.  4Q13 earnings  were  boosted  by  profits  from  land  sales  and  higher  progress billings. The company's earnings prospects remain positive, underpinned by  new  sales  amounting  to  MYR2.16bn  in  FY13  (9M13:  MYR1.85bn) and high unbilled sales totalling MYR2.18bn.
• More than MYR2bn launches planned for FY14. TRCB  is targeting for launches  of  up  to  MYR3.2bn  for  FY14,  although  this  figure  could  be lower  given  the  softer  outlook  for  the  property  sector.   However,  it  is confident of delivering  new sales  totalling  about MYR2bn in  FY14.  It  will sharpen  its  focus  on  the  central  and  northern  region,  and  40%  of  the offerings  will be landed properties.  About  MYR566m  worth  of GDV  has been  launched  so  far,  including  MYR252m  in  Tropicana  Heights  in Kajang  (landed)  and  MYR314m  in  Tropicana  Macalister,  Penang  (high rise). Both projects have received positive response, with tak e-up rates of 62% and 36% respectively.
• Degearing  efforts  to  continue.  TRCB  will  continue  with  its  efforts  to degear  in FY14  through more land sales and  disposing of its  non-core assets. Although the group’s  net gearing stood at 0.55x as at end-FY13, this  could increase to 0.8x as management has allocated total capex of MYR800m  for  FY14.  TRCB  continues  to  actively  seek  buyers  for  its investment  properties,  including  Tropicana  City  Mall.  Meanwhile,  gains from  land  sales  in  FY14  may  come  in  higher  than  the  MYR339m recorded in FY13  given the rise in land prices,  as well as the larger land parcels to be put up for sale.
• Maintain  BUY.  Our  FY14  earnings  forecast  go  up  by  a  slight  2%  on updating our FY13 numbers. We maintain our FV of MYR2.19, based on a 25% discount to RNAV.

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Company Profile
Tropicana Corporation is a developer in Malaysia. The company is known for its flagship developments, Tropicana Golf and Coun try Resort and Tropicana Indah, in Petaling Jaya

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Source: RHB