| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM1.33 (+45.4%) |
| Last Traded | RM0.915 |
| Recommendation |
A leading property developer has significantly outperformed expectations in its financial year 2025 (FY25), driven by strong margins and the timely recognition of a major land sale. The impressive results have prompted TA Securities to maintain its “BUY” recommendation and raise its target price for the stock.
Performance Review
The company’s core net profit for FY25 reached RM697.2mn, substantially exceeding forecasts. This figure represented 188% of TA Securities’ full-year forecast and 181% of consensus estimates, signaling robust operational execution.
This strong performance was primarily attributed to enhanced margins, bolstered by the earlier-than-expected recognition of a significant RM500mn Tanjung Kupang land sale in 4QFY25. Despite a 20% year-on-year decline in FY25 revenue to RM4.2bn—mainly due to lower land sale contributions (-43% YoY) and the absence of project handovers from Australia and Vietnam that boosted prior year earnings—the core net profit still managed a 13% year-on-year increase. This was largely supported by stronger margins from land disposals, with management indicating that the RM838mn land sales achieved PBT (Profit Before Tax) margins exceeding 50%.
Notably, the company recognized RM189.3mn in write-downs during 4QFY25. This strategic recalibration of development plans effectively reset legacy capitalized costs and aligned carrying values with updated master plans, thereby mitigating risks of future impairments. Furthermore, the group declared an ordinary dividend of 2.55 sen/share, surpassing TA Securities’ forecast of 1.5 sen/share.
The fourth quarter of FY25 was particularly strong, with core net profit surging 447% quarter-on-quarter to RM441.2mn on an 87% jump in revenue to RM1.63bn. This surge was primarily driven by the full recognition of the RM500mn Tanjung Kupang disposal, alongside a 31% quarter-on-quarter growth in property development revenue.
Future Outlook and Strategic Initiatives
The company’s unbilled sales expanded to RM4.5bn as of December 2025, providing over a year of clear earnings visibility. Management has set a sales target of RM4.6bn for FY26, predominantly driven by domestic projects with minimal land sales contributions anticipated. Planned launches for FY26 are projected at RM5.36bn, focusing on domestic developments and contributions from overseas projects.
Looking ahead, the group intends to expand into the industrial segment, with initial phases at Setia Fontaines, Penang, slated for launch in mid-2026. Additional industrial land has been earmarked in Johor and Selangor, with management exploring joint venture opportunities to progressively grow this segment.
A proposed Real Estate Investment Trust (REIT) listing is also underway, aiming to unlock up to RM700mn. Submission to Bursa Malaysia is targeted for August 2026, with listing expected in 1QFY27 at a valuation exceeding RM2.0bn. This initiative is expected to reduce debt, create headroom for new launches and industrial expansion, and establish a stable recurring income platform.
Over the longer term, the company aims for a more balanced earnings profile, targeting 70-80% of PAT from property development and 20-30% from investment properties, REIT, and fee-based income, enhancing overall earnings stability and visibility.
Valuation and Recommendation
TA Securities has upgraded its target price to RM1.33 from RM1.26, representing a 45.4% upside from the last traded price of RM0.915. This valuation is based on 0.45x Price-to-Book (P/B) with an additional 3% ESG premium, reflecting the company’s strong environmental, social, and governance practices.
The investment bank maintains its “BUY” recommendation, citing the robust financial performance and strategic initiatives poised for future growth. Minor revisions were made to FY26-27 forecasts (+0.9% and +1.5%) primarily due to the timing shift of land sale contributions.
