Lagenda Properties’ earnings growth about to speed up, says CGS International

KUALA LUMPUR (Feb 4): Lagenda Properties Bhd (KL:LAGENDA) is about to see an acceleration in earnings over the next two years from robust demand for affordable homes, said CGS International.

Net profit margins at Lagenda, which are already higher than the average of its peers, may also expand gradually to 19% by 2027, the research house said in initiating coverage on the property developer with a ‘buy’ call.

“We believe Lagenda is on the cusp of a renewed earnings acceleration cycle, which serves as a catalyst for valuation multiple expansion,” CGS International said.

Shares of Lagenda have risen some 20% in the first month of 2026 but have yet to recover from a sharp decline in 2024 when one of its senior executives was involved in an investigation into the subdivision of Malay reserve land in Manjung, Perak. The company last year said its executive was eventually cleared of any wrongdoing or involvement in the case.

The company, nevertheless, commands ‘buy’ calls from all three other research houses. CGS International’s target price of RM2.03 is the highest in the consensus and nearly 25% above the average.

At the last price of RM1.50, Lagenda is trading at six times its forward earnings, a steep discount to the domestic sector average of 13 times, CGS International noted. Further, the stock is attractive given the projected return on equity of 19%, more than double the sector average, the research house said.

“We attribute this valuation mismatch to the market’s limited recognition of the prospect of a new earnings upcycle for the company,” CGS International said.

Lagenda focuses on affordable homes priced mostly below RM300,000, and new home sales are expected to rise to RM1.78 billion in 2027, delivering a three-year average annual growth of a little over 16% from new townships, CGS International's forecasts showed.

Growth would come from multiple states, including Perak, Selangor, Pahang, and Negeri Sembilan; the company has seen strong traction in Johor, particularly Kulai, from rising economic activity linked to the Johor–Singapore Special Economic Zone, according to the research house.

Margin improvement, meanwhile, would be driven by “economies of scale, operating leverage, and a more favourable project mix”, it added.

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