SKYWLD: Property Developer Posts Resilient Earnings, Order Book and New Launches Signal Stronger H2
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.70 (+38.6%) |
| Last Traded | RM0.505 |
| Recommendation |
A leading property developer has reported core net profit for the first half of fiscal year 2026 (IHFY26) that aligned with internal projections, although falling below consensus estimates. Despite a challenging nine-month period marked by year-on-year declines in revenue and profit, the company demonstrated a sequential rebound in the second quarter, driven by accelerated project progress and contributions from new developments. Analysts anticipate a significantly stronger second half, bolstered by a robust unbilled sales pipeline and strategic new launches.
Performance Review
For IHFY26, the developer recorded a core net profit of RM10.8 million. While this figure was deemed to be within the investment bank’s expectations, accounting for 26% of its full-year forecast, it trailed the 21% anticipated by the broader consensus. This divergence is attributed to expectations of stronger progress billings in the latter half of the fiscal year, alongside improved construction momentum and fresh project contributions.
The group experienced a notable contraction in its 9MFY26 performance, with revenue declining 28% and core net profit dropping 48% year-on-year. This downturn was primarily a consequence of key projects from the previous year, such as EdgeWood Residences and SkyVogue Residences, having reached completion, while newer developments are still in their nascent construction phases. Consequently, the EBIT margin narrowed by 3.6 percentage points to 15.3%, reflecting reduced operating leverage from fewer ongoing projects.
However, the second quarter of FY26 (2QFY26) signaled a positive turnaround. Revenue saw a 16% quarter-on-quarter increase to RM86.7 million, and core net profit rebounded strongly by 87% quarter-on-quarter to RM7.1 million. This sequential improvement was largely fueled by higher progressive revenue recognition from Vesta Residences and initial contributions from SkyAman I Residences. A crucial factor in this acceleration was the appointment of a new main contractor in July 2025, which expedited work progress at Vesta Residences, previously affected by delays. The company has also proposed a first interim dividend of 0.22 sen per share, slated for payment on January 15, 2026.
Outlook and Growth Drivers
Looking ahead, the investment bank maintains its projection for a significantly stronger second half. As of end-September 2025, the company’s unbilled sales expanded to RM589 million, up from RM483.1 million in the preceding quarter. This represents a healthy 1.5 times cover of the FY26 revenue forecasts, providing robust earnings visibility for the next 12 to 18 months.
During IHFY26, the group launched new projects valued at RM843.5 million, including SkyAman I Residences (Cheras), SkyAwani PRIMA Residences (Brickfields), and SkyAwani 6 Residences (Setapak), collectively representing 42% of its ambitious FY26 launch target of RM2.0 billion. Among the upcoming projects, particular optimism surrounds SkyAwani Pearlmont Residences in Seberang Jaya, Penang. This freehold affordable housing development will feature 900 sq ft units with three bedrooms and two bathrooms, priced from approximately RM323,000. This project is expected to tap into strong demand within Penang’s tight affordability market. Furthermore, the adoption of the Prefabricated Prefinished Volumetric Construction (PPVC) method for this project is set to shorten construction cycles by 20-30% and enhance margin resilience by reducing rework and financing costs.
Analyst View
TA Securities has reiterated its “BUY” recommendation for the property developer, maintaining an unchanged target price of RM0.70 per share. This valuation is based on 0.7 times calendar year 2026 price-to-book ratio, incorporating a 3% ESG premium, reflecting the company’s 4-star ESG rating. The positive outlook underscores confidence in the company’s ability to capitalize on its strategic project pipeline and operational efficiencies to deliver improved performance in the coming periods.
