Hua Yang Bhd
Oct 24, (RM2.38)
Maintain take profit with target price of RM1.79: Hua Yang’s net profit for the second quarter of financial year 2015 ending March (2QFY15) of RM26.3 million came in within our and market expectations, making up 50% of our and consensus’ annual forecasts. Sales in 2Q showed a marked improvement of 34.4% quarter-on-quarter driven by the more resilient township segment, specifically from Pulai Hijauan, Skudai in Johor, and Bandar Universiti Seri Iskandar, about 35km south-west of Ipoh, Perak, as well as Sentrio Suites in Desa Pandan, Kuala Lumpur. Net margins improved by one percentage point to 19% for the quarter.

Total sales clinched in the first half (1H) of FY15 were RM192.2 million or 43% of our estimates. We expect sales for 2HFY15 to pick up from new launches such as Cube@One South, Seri Kembangan, Selangor (small office/home office or SoHo) and CityWoods, Johor Baru, (serviced apartments), launched in September this year. We expect the current unbilled sales of RM757 million to increase further on the back of RM1.1 billion worth of new launches in FY15.

 Our target price of RM1.79 is based on a blended historical price-to-book value of 1.0 times and price-earnings ratio (PER) of 5.5 times. We are positive on the approved issuance of sukuk murabaha that totalled RM250 million, which could be drawn down over a two-year period, for future potential land acquisitions. — BIMB Securities Research, Oct 24

This article first appeared in The Edge Financial Daily, on October 27, 2014.