• Maintain NEUTRAL, with new MYR1.20 TP from MYR0.91, 8% upside. Tambun Indah’s 1Q24 results beat expectations as it recorded MYR88.1m in new property sales, ahead of management’s full-year guidance of MYR150m. Management is keeping its guidance for now. Despite the strong start, we keep our NEUTRAL call on the stock as management’s conservative plans should limit the upside to earnings with just one launch planned for the end of the year with a GDV of MYR52m.

• 1Q24 results review. Revenue increased by 42% YoY (+17% QoQ), mainly due to the MYR88.1m in new property sales (1Q23: MYR44.4m). QoQ, revenue grew due to the progressive revenue recognition from ongoing projects, particularly Pearl Impiana and Botanic Villa. Core net profit rose to MYR14.9m (+33% QoQ, +38% YoY), making up 29-31% of our and Street’s full-year estimates.

• Focus on existing projects. With the take-up rates for Dahlia Garden (GDV: MYR120m) and Botanic Villa (GDV: MYR301m) at only 66% and 47% after being launched last year, the two projects will be TILB’s focus for this year. The two projects made up 55% of total revenue in 1Q24, while three projects (Aster Villa, Ambay Garden, and Pearl Impiana) made up 35% of total revenue. As those three projects are already at a 98% take-up rate, we think earnings could ease in 2H24 as they near completion. Overall, the take-up rate for its ongoing projects increased to 73% from 62% in 4Q23.

• Just one small launch planned. TILB is planning to launch a freehold landed project in Bukit Mertajam with an expected GDV of MYR52m towards the end of the year. The project will offer 74 units of double storey terrace house. Due to the relatively small size and timing of the project, earnings in FY24F would mostly be driven by Botanic Villa and Dahlia Garden.

• Forecasts. We increase our FY24F-25F earnings by 4% after adjusting our sales assumptions. Our TP is raised to MYR1.20 as we lower our discount to RNAV to 60% from 70% to be in line with the overall sector re-rating. It also includes a 0% premium/discount as TILB’s ESG score is 3.0. Key risks include higher-than-expected property sales and strategic landbank acquisitions.

Source: RHB Research - 29 May 2024