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YNH Property
1QFY10 : A better quarter but doubt remains
Above expectation
1QFY10 results were above house but within market expectations. Reported net profits achieved 37% and 24% of house and consensus fullyear estimates respectively. Although results are ahead of our estimates on an annualised basis, we remain concern of its sustainability over the remaining quarters of the year.
• Higher revenue but margin compressed
Revenue has increased by 49.1% y-o-y to RM93.8m which was contributed by recognition of progressive sales of development projects in Ceriaan Kiara (Mont Kiara), Taman Manjung Baru, Taman Singa Baru,Taman Pegawai, Taman Emas and sales of completed properties and development land. However, net profit has decreased by 2.7% due to lower margin of 15.7% in 1QFY10 as compared to 24.1% in 1QFY09. On q-o-q basis, revenue and net profit increased by a whopping 96.2% and 63.5% respectively mainly due to a slow 4QFY09.
• Good results may not be repeated
Although 1QFY10 results were positive, we believe much of it has been contributed by Ceriaan Kiara which is the tail end of its development and not expected to contribute further earnings in 2HFY10, except sale of completed units. Concerns remain whether YNH will be able to roll out its much delayed projects such as Kiara 163 and the retail portion of Menara YNH. Our concerns are reflected in our conservative earnings estimates which are below consensus numbers. We will be seeking more information from management at an analyst briefing to be held today.
• Maintain SELL
While YNH is trading at steep discount to its RNAV of RM3.14, the lack of earnings clarity going forward means that there will be no catalyst to narrow the valuation gap. On the other hand, persistent delay in project launches has raised downside risk of earnings. As such, we are maintaining our SELL call. Target price of RM1.43 is based on 10x P/E on
average EPS of FY10 and FY11.
1QFY10 : A better quarter but doubt remains
Above expectation
1QFY10 results were above house but within market expectations. Reported net profits achieved 37% and 24% of house and consensus fullyear estimates respectively. Although results are ahead of our estimates on an annualised basis, we remain concern of its sustainability over the remaining quarters of the year.
• Higher revenue but margin compressed
Revenue has increased by 49.1% y-o-y to RM93.8m which was contributed by recognition of progressive sales of development projects in Ceriaan Kiara (Mont Kiara), Taman Manjung Baru, Taman Singa Baru,Taman Pegawai, Taman Emas and sales of completed properties and development land. However, net profit has decreased by 2.7% due to lower margin of 15.7% in 1QFY10 as compared to 24.1% in 1QFY09. On q-o-q basis, revenue and net profit increased by a whopping 96.2% and 63.5% respectively mainly due to a slow 4QFY09.
• Good results may not be repeated
Although 1QFY10 results were positive, we believe much of it has been contributed by Ceriaan Kiara which is the tail end of its development and not expected to contribute further earnings in 2HFY10, except sale of completed units. Concerns remain whether YNH will be able to roll out its much delayed projects such as Kiara 163 and the retail portion of Menara YNH. Our concerns are reflected in our conservative earnings estimates which are below consensus numbers. We will be seeking more information from management at an analyst briefing to be held today.
• Maintain SELL
While YNH is trading at steep discount to its RNAV of RM3.14, the lack of earnings clarity going forward means that there will be no catalyst to narrow the valuation gap. On the other hand, persistent delay in project launches has raised downside risk of earnings. As such, we are maintaining our SELL call. Target price of RM1.43 is based on 10x P/E on
average EPS of FY10 and FY11.
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