UEMS: Property Developer Surpasses Pre-Sales Target Despite Q4 Impairment Drag
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading property developer reported a mixed performance for its fourth quarter of fiscal year 2025 (4QFY25), with a net profit of RM18.9 million, marking a decline of 20.3% year-on-year and 15.7% quarter-on-quarter. This figure came in below both internal and consensus estimates. However, the full fiscal year 2025 (FY25) net profit, excluding approximately RM50 million in net impairment losses, would have surpassed market expectations, indicating underlying operational strength.
The group demonstrated robust sales performance, exceeding its FY25 pre-sales target of RM1.05 billion by an impressive 35%, securing RM1.4 billion in new sales during the year. Unbilled sales now stand at approximately RM2.1 billion, providing revenue visibility for the next 36 months.
Operational Review
FY25 revenue saw a significant 27% year-on-year increase, reaching RM1.7 billion. This growth was primarily fueled by the property development segment, which contributed 73% to total revenue, up from 66% in FY24. Key projects driving this performance included The MINH and The Connaught One in the Central region, alongside Aspira Hills and Aspira LakeHomes in the Southern region. The group also capitalized on strategic land monetization initiatives in Iskandar Puteri and Tapah, Perak.
Conversely, the property investment segment experienced headwinds, with revenue affected by a temporary occupancy transition at Hyatt House due to renovations and the termination of an anchor tenant at Aurora Melbourne Central. This softer utilization in parts of the investment portfolio impacted overall segmental performance.
Future Prospects
Looking ahead, the group has set an ambitious sales target of RM1.3 billion for FY26, alongside a launched Gross Development Value (GDV) target of RM2.2 billion. The development pipeline is slated to focus on attainable and upgrader homes across prime locations in the Central region such as Serene Heights and Mont Kiara, as well as in the Southern region, including Gerbang Nusajaya and Estuari. Internationally, the focus remains on its One Oval development in Australia.
Analyst View
Public Investment Bank maintains a Neutral call on the company, with an unchanged target price of RM0.60. The valuation is based on approximately 0.4x book value, aligning with its five-year average discount to book, suggesting the stock is fairly valued at current levels.
