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Hua Yang gains 5% after posting strong 3Q15 results

KUALA LUMPUR (January 22): Hua Yang Bhd gained as much as 5% during the morning trading session, after the company posted strong results for its third quarter ended Dec 31, 2014 (3Q15).

At 11am, Hua Yang (fundamental: 1.7; valuation: 2.4) rose 8 sen or 4% to RM2.23, with 469,500 shares exchanging hands. The counter earlier gained 10 sen or 5% to reach a high of RM2.25.

In a filing yesterday, Hua Yang posted net profit of RM30.9 million for the quarter, up 57% from RM19.7 million a year earlier, while revenue climbed 20% to RM155.5 million from RM129.9 million.

For the cumulative nine months ended Dec 31 (9M15), net profit soared 82% to RM80.9 million from RM44.4 million in the previous year, on the back of RM431.5 million in revenue, jumping 38% from RM311.6 million.

In a note today, RHB Research Institute Sdn Bhd said that the 3Q15 results were above expectations, with the research house keeping its “buy” call on the stock and target price (TP) of RM2.28.

“Hua Yang’s 3Q15 core profit of MYR30.9 million brought 9MFY15 core profit to MYR80.9m, above our but within consensus estimates.

“9M15 revenue grew 38.5% year-on-year (y-o-y), underpinned by progress billings from its ongoing township projects such as Taman Pulai Hijauan, Bandar Universiti Seri Iskandar and high-rise projects such as One South, Metia Residences and Sentrio Suites,” said RHB.

Despite the softening market conditions, RHB said Hua Yang is still on track to meet its sales target of RM500 million for FY15, as the company posted new sales of RM149.8 million in 3Q15, bringing 9M15 new sales to RM342.0 million.

Meanwhile, the group’s unbilled sales stood at RM733.3 million, compared to RM717.9 million in the immediate preceding quarter, with its projects in the Klang Valley making up 70% of its total unbilled sales.

“Our TP is maintained at MYR2.28, based on an unchanged 25% discount to RNAV, pending today’s briefing. We believe that despite the challenging outlook for the overall property segment, Hua Yang should continue to fare better than some of its peers, given its affordable product offerings,” said RHB.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Go to www.theedgemarkets.com for more details on a company's financial dashboard.)

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