UEMS: Solid Performance Driven by Project Billings, Analysts Affirm Buy Rating
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
The company delivered a robust performance, with its fourth quarter 2025 (4Q25) core earnings meeting expectations and full-year 2025 property sales significantly exceeding management’s targets. This positive momentum was largely driven by consistent billings from ongoing projects and strategic new launches.
Performance Review
For the fiscal year 2025 (FY25), property sales reached an impressive RM1.414 billion, comfortably surpassing the management’s ambitious target of RM1.05 billion. Core earnings for the entire year also demonstrated strength, growing by a healthy 16.4%. While headline net profit in 4Q25 was impacted by RM53.1 million in non-operational adjustments, primarily impairment losses on inventories and contract assets, the underlying operational performance remained solid.
Property development revenue was consistently bolstered by strong billings from key ongoing projects such as Aspira Hills, Aspira LakeHomes, The Minh, and The Connaught One. Net gearing remained stable at 0.37x, reflecting a prudent financial position. A dividend of 1.43 sen was declared, maintaining a 60% dividend payout ratio.
Fourth quarter 2025 property sales stood at RM334 million. For the full year, the sales were primarily contributed by projects in the Central region (55%) and Southern region (45%). Significant contributors included Connaught One (RM217.3 million), The Minh (RM189.2 million), Residensi Zig (RM158 million), and Aspira Hills (RM295.7 million). The One Oval project in Subiaco, Perth, also contributed RM136 million in sales, with its take-up rate expected to improve from the current 17%.
Operational Challenges
The primary headwinds in 4Q25 stemmed from the one-off non-operational adjustments, including impairment losses, which affected reported earnings and EBIT. Additionally, unbilled sales experienced a slight easing, declining to RM2.05 billion from RM2.11 billion as at 3Q25.
Future Outlook and Strategic Focus
Looking ahead, the company is poised for an aggressive year of launches, targeting RM1.3 billion in sales for FY26. A total of RM2.2 billion worth of projects are planned for launch in FY26, with approximately 40% concentrated in the high-potential Iskandar Malaysia region, strategically capitalizing on opportunities within the Johor-Singapore Special Economic Zone. Key launches include The Minh Phase 2 in Mont’ Kiara, boasting a Gross Development Value (GDV) of RM1.094 billion. The long-anticipated data centre land sale in East Ledang is also projected to be completed within FY26.
Analyst’s Stance
Analysts from TA SECURITIES have maintained their “BUY” recommendation for the stock. They have set a target price of RM0.25, indicating a potential upside of 25.0% from the last traded price of RM0.20.
