SKYWLD: Operational Momentum and Strong Pipeline Underpin Continued ‘BUY’ Rating

Recent insights from a 1HFY26 briefing highlight continued operational progress and robust near-term visibility for a prominent property developer. Despite some adjustments to near-term earnings forecasts, the company’s strong project uptake and substantial development pipeline have led to the reaffirmation of a ‘BUY’ rating by Mercury Securities.

Performance Review

The company has demonstrated significant strength in project take-up rates. Curvo Residence notably saw its take-up rate strengthen to 70%, an increase of 9% quarter-on-quarter. Similarly, Vesta Residences achieved an 86.8% take-up rate, climbing 6% quarter-on-quarter, even amidst early-stage construction and a contractor replacement. Analysts consider the margin impact from this change to be manageable due to a swift transition and the early project phase.

Strategic Growth and Future Outlook

The developer boasts a robust development pipeline, with four projects lined up for the remainder of FY26, contributing a cumulative Gross Development Value (GDV) exceeding RM1.8 billion. Beyond FY26, significant longer-term earnings visibility is supported by major projects like SkyWorld Cassia in Penang (estimated GDV: RM1.3 billion) and the first X-Premier Series in Mont Kiara (estimated GDV: RM1.3 billion).

A key strategic initiative is the advanced progress of its PPVC (Pre-fabricated, Pre-finished Volumetric Construction) factory near Batu Kawan. Following an RM82.7 million land acquisition and securing RM189 million in credit facilities, development plans have been submitted, with construction expected to commence in 4QFY26 and operations targeted by 3QFY27. This facility is anticipated to significantly enhance project margins, particularly in Penang, by reducing logistics costs and improving delivery efficiency, capable of producing approximately 3,600 residential units annually.

However, the company’s ventures in Vietnam remain in early stages, with a Memorandum of Understanding for one project having lapsed, an amended Sales and Purchase Agreement signed for another, and negotiations ongoing for a third project. These landbanks collectively hold an estimated GDV of RM0.3 billion.

Earnings Forecast and Valuation

Mercury Securities has revised its FY26E earnings forecast downwards by 20% to RM44.2 million. This adjustment primarily reflects the later-than-expected launch of the SkyWorld Cassia project, now scheduled for 1HFY27 instead of the previously assumed 2HFY26. Consequently, the target price has been slightly adjusted lower from RM0.59 to RM0.58 per share, representing a 68% discount to the estimated RNAV of RM1.81 per share. Despite this near-term revision, the attractive FY27E dividend yield of 4.9%, aligning with the company’s policy of distributing a minimum of 20% of PATAMI, reinforces the ‘BUY’ recommendation.

Analysts anticipate a stronger pickup in revenue and earnings in 2HFY26, fueled by the upcoming project launches. Overall, the investment bank continues to favor the developer, citing its strong positioning in the affordable housing segment, resilient demand, supportive government policies, and solid near-term earnings visibility.