E: Property Developer Exceeds Expectations on Strong Project Sales, Future Growth Anticipated
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading property developer has announced financial results for its third quarter (3QFY26) ended March that have exceeded expectations. The strong performance was largely driven by successful project sales and robust billings. Investment bank RHB maintains its BUY rating on the stock, with a Target Price of MYR1.17, indicating a significant 57% upside from its last traded price of MYR0.75 as of the report date.
Performance Review
The company’s 3QFY26 results demonstrated notable sequential growth in revenue, primarily attributed to strong billings from ongoing projects such as Fera, Senna Phase 1 and 2, and The Lume. The maiden launch of Laman Embun also contributed significantly to this growth. Excluding an unrealised forex loss of MYR26.9m, the company’s core earnings experienced an impressive surge of 50% quarter-on-quarter (QoQ) and 107% year-on-year (YoY). Cumulatively, 9MFY26 property sales reached MYR854m, surpassing previous expectations.
Despite the robust earnings, net gearing saw a modest increase to 0.73x from 0.64x in the preceding quarter, primarily due to new borrowings undertaken to fund construction and reclamation works. An interim dividend of 1 sen was declared, consistent with the previous fiscal year’s 2QFY25 declaration.
Key Project Contributions and Challenges
The maiden launch of Laman Embun, offering shop lots in Elmina, was a significant driver for 3QFY26 sales, generating MYR429m compared to MYR271.4m in 2QFY26. This project was fully taken up, with sales expected to flow through to 4QFY26. Additionally, Avea Phase 1 at Andaman Island was launched in December 2025, featuring small unit sizes at an average selling price (ASP) of MYR1,200 psf, with over 30% of units already sold.
However, the report highlighted somewhat slower sales for Seri Embun Phase 1, a landed residential project in Elmina. This softness was attributed to intense competition from other developers operating in the vicinity.
Future Outlook and Strategy
The company maintains a healthy pipeline of launches aimed at underpinning its future earnings momentum. Management has set an ambitious target of MYR1bn in new project launches annually. Future launches for FY27 are expected to include 16A2, a low-density condominium, and high-rise affordable homes at Andaman Island.
Supporting this optimistic outlook, the company’s unbilled sales significantly rose to MYR1.5bn, up from MYR1.36bn as at 2QFY26. This substantial increase provides strong revenue visibility for the upcoming periods.
Analyst’s View
In light of the strong set of results, RHB has revised its FY26F-28F earnings forecasts upwards by 14%, 14%, and 15% respectively. The investment bank’s target price of MYR1.17 is derived using a 50% discount to its revised net asset value (RNAV), incorporating a 2% ESG discount given the company’s ESG score of 2.90. RHB reiterates its positive outlook, maintaining a BUY recommendation for investors.
