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Hunza Properties
FY10 sales doubles YoY
. FY10 net profit of RM50.9m was ahead of market but within our expectations; exceeding street’s FY10E net profit of RM48.2m by 6% and accounting for 99% of our RM51.3m. Hunza Properties (Hunza) also declared a final single tier DPS of 5.6sen, giving a total FY10 DPS of 8.1sen (5.8% yield).
. YoY, FY10 net profit grew 85%. FY10 sales doubled YoY to RM124m lead by Infiniti (50% of sales), Gurney Paragon Condo (GPC), Alila and Mutiara Seputeh (bungalows).
Infiniti’s completion also allowed for stronger billings in FY10.
. 4Q10 pretax profit of RM19.7m expanded 35% QoQ, buoyed by stronger billings from GPC with construction progress at 74% compared to 51% last quarter. Infiniti registered a sizeable increase in take-up rates of 87% (3Q10: 80%). It helped compensate for softer take-ups of GPC, which recorded 63% (3Q10: 61%).
Slow GPC sales are attributable to absence of show units that were torn down to make way for Gurney Paragon Mall (GPM). We expect better GPC take-ups going forward as new show unit is now up whilst GPM works become more visible.
. FY11-12E net profit of RM47.0m (-8% YoY) – RM29.4m (-38% YoY) unchanged, pending today’s analyst briefing. Unbilled sales of RM103m, providing < 0.5 years visibility, have been shrinking over the year due to less new launches.
. We continue to be cautious of shrinking profits due to lack of new sizeable launches. Although we factored for Alila 2 (GDV: RM280m) and Bandar Putra Bertam Zone L1 (GDV: RM30m) launches in mid FY11, earnings still downtrends.
. We opine balance sheet strength will likely be devoted to GPM (currently 14% progress completion of basement works); balance sheet is healthy at 0.05x net gearing (gross: 0.2x) with a cash pile of RM67m. Hence, if GPC take-up rates remain soft, it diminishes possibility of other potential landbanking opportunities over next 12-18 months; exceptions are if land is secured on a JV basis. Positively, current balance sheet limitations should not affect the Bayan Baru land acquisition since 95% of payments are only payable in >2 years time, assuming vendor meets SPA conditions; GPM would be completed by then.
. Nonetheless, trough valuations provide trading opportunities; 1) 5.4x FY11E PER vs. 7.6x historical and 8.9x peers 2) 0.6x FY11E PBV vs. historical 0.8x and peer’s 0.7x. Our Trading BUY and fair value of RM1.96 (based on our FD SOP RNAV) is under review pending today’s analyst briefing.
FY10 sales doubles YoY
. FY10 net profit of RM50.9m was ahead of market but within our expectations; exceeding street’s FY10E net profit of RM48.2m by 6% and accounting for 99% of our RM51.3m. Hunza Properties (Hunza) also declared a final single tier DPS of 5.6sen, giving a total FY10 DPS of 8.1sen (5.8% yield).
. YoY, FY10 net profit grew 85%. FY10 sales doubled YoY to RM124m lead by Infiniti (50% of sales), Gurney Paragon Condo (GPC), Alila and Mutiara Seputeh (bungalows).
Infiniti’s completion also allowed for stronger billings in FY10.
. 4Q10 pretax profit of RM19.7m expanded 35% QoQ, buoyed by stronger billings from GPC with construction progress at 74% compared to 51% last quarter. Infiniti registered a sizeable increase in take-up rates of 87% (3Q10: 80%). It helped compensate for softer take-ups of GPC, which recorded 63% (3Q10: 61%).
Slow GPC sales are attributable to absence of show units that were torn down to make way for Gurney Paragon Mall (GPM). We expect better GPC take-ups going forward as new show unit is now up whilst GPM works become more visible.
. FY11-12E net profit of RM47.0m (-8% YoY) – RM29.4m (-38% YoY) unchanged, pending today’s analyst briefing. Unbilled sales of RM103m, providing < 0.5 years visibility, have been shrinking over the year due to less new launches.
. We continue to be cautious of shrinking profits due to lack of new sizeable launches. Although we factored for Alila 2 (GDV: RM280m) and Bandar Putra Bertam Zone L1 (GDV: RM30m) launches in mid FY11, earnings still downtrends.
. We opine balance sheet strength will likely be devoted to GPM (currently 14% progress completion of basement works); balance sheet is healthy at 0.05x net gearing (gross: 0.2x) with a cash pile of RM67m. Hence, if GPC take-up rates remain soft, it diminishes possibility of other potential landbanking opportunities over next 12-18 months; exceptions are if land is secured on a JV basis. Positively, current balance sheet limitations should not affect the Bayan Baru land acquisition since 95% of payments are only payable in >2 years time, assuming vendor meets SPA conditions; GPM would be completed by then.
. Nonetheless, trough valuations provide trading opportunities; 1) 5.4x FY11E PER vs. 7.6x historical and 8.9x peers 2) 0.6x FY11E PBV vs. historical 0.8x and peer’s 0.7x. Our Trading BUY and fair value of RM1.96 (based on our FD SOP RNAV) is under review pending today’s analyst briefing.
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