| Investment Bank | MERCURY SECURITIES |
|---|---|
| TP (Target Price) | RM0.58 (+28.9%) |
| Last Traded | RM0.45 |
| Recommendation |
Performance Overview
The company reported a 9MFY26 PATAMI of RM24.2 million, achieving 55% of its full-year estimate. While the nine-month period saw a year-on-year dip in revenue (9.9%) and PATAMI (36.1%) due to the completion of earlier projects like EdgeWood and SkyVogue, the third quarter (3QFY26) demonstrated a significant turnaround.
Revenue surged by 58% quarter-on-quarter (QoQ) and earnings by 69% QoQ, driven by accelerated billings from key projects such as Curvo and Vesta Residences. This robust performance was further boosted by maiden contributions from newly launched initiatives including SkyAwani PR1MA, SkyAwani 6, and SkyAwani Pearlmont Residences Phase 1. Despite increased operating expenses, EBITDA and EBIT margins remained resilient, supported by a bolstered gross profit margin attributed to early-stage billings from Vesta Residences and SkyAman 1, which typically offer higher profitability.
Operational Strengths and Future Outlook
The momentum is further underscored by a robust increase in unbilled sales, which surged by 84% QoQ to RM1.1 billion, signaling a strong pipeline for future revenue recognition. The company also introduced a fresh pipeline of projects with an estimated Gross Development Value (GDV) of RM1.5 billion from new launches, representing 3.3 times its FY26 revenue forecast and providing a substantial runway for growth.
Since its listing in July 2023, the company has successfully realized RM2.8 billion in GDV, accounting for 61% of its 2026 commitment. Analysts remain constructive on the group’s leadership in the resilient affordable housing segment, a position further strengthened by the adoption of PPVC technology, which drives execution efficiency and protects margins. A significantly stronger 4QFY26 performance is anticipated due to higher revenue pickup.
Valuation and Recommendation
Mercury Securities has maintained its earnings forecasts, anticipating a higher revenue pick-up in 4QFY26. Consequently, the investment bank reiterates its RNAV-derived Target Price of RM0.58, maintaining a “BUY” recommendation for the stock.
