| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM1.77 (+70.3%) |
| Last Traded | RM1.17 |
| Recommendation |
Performance Highlights
A leading property developer has reported an FY25 core net profit of RM246.1 million, largely aligning with analyst expectations and showing a 2.5% year-on-year increase. The performance was primarily bolstered by operational efficiencies and stronger margins in its property division, prompting TA Securities to reiterate its “BUY” recommendation and raise its target price to RM1.77.
The reported core net profit for FY25, while meeting 95% of TA Securities’ forecast, came in slightly below the consensus estimate at 93%. Revenue for the year remained largely flat at RM2.5 billion. The board declared a final dividend of 5.0 sen per share, representing a 49% payout ratio, an increase from 4.5 sen per share in FY24.
Quarterly Performance and Sales Review
However, the fourth quarter of FY25 saw a sequential decline in core net profit by 21.5% quarter-on-quarter to RM50.7 million, attributed to higher administrative, selling, marketing, finance, and tax expenses. New property sales for FY25 totaled RM2.51 billion, falling short of management’s target by 5.2% due to regulatory approval delays for a key launch.
Operational Efficiencies
The property development segment was the primary earnings driver, with operating profit increasing 10% year-on-year, supported by stronger EBIT margins following the finalisation of construction costs for projects nearing completion. Concurrently, the manufacturing division significantly narrowed its operating loss to RM4.3 million from RM8.0 million in FY24, a result of ongoing cost rationalisation efforts. Despite facing challenging conditions in the glove division, marked by global oversupply and weak Average Selling Prices (ASPs), management is actively marketing FDA-approved products and aims for breakeven within the year through stronger order flows and better cost optimisation.
Future Outlook and Strategy
The group’s unbilled sales reached an eight-year high of RM3.2 billion as of end-December, providing over 12 months of earnings visibility, equivalent to 1.6 times its FY25 property development revenue. For FY26, the company has set a sales target of RM2.76 billion, representing a 9.6% year-on-year increase, supported by planned launches valued at RM3.45 billion. These include continued M Series affordable homes, the maiden rollout of MS Industrial Park in Kulai, and a new premium brand at the former Corus Hotel site in Kuala Lumpur. Management expresses confidence in the resilient demand for affordable urban housing. Furthermore, the balance sheet remains strong with net gearing at 0.26x and cash of RM1.2 billion. The group also intends to pursue selective acquisitions in key areas like Klang Valley, Johor, and Penang to bolster its residential and industrial pipeline. Discussions are also ongoing for outright land sales to data centre operators at Southville City and Meridin East.
Analyst View and Recommendation
TA Securities has maintained its “BUY” recommendation, revising the target price upwards to RM1.77 per share from the previous RM1.72. This revised valuation is based on 1.0x Price-to-Book (P/Bk) with a 3% ESG premium. The investment bank remains constructive on the company, citing its strong balance sheet, disciplined land banking, resilient affordable housing positioning, and healthy unbilled sales that underpin long-term earnings visibility.
