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E: Property Developer Gears Up for Strong FY26 Launches Despite Sales Headwinds
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A property developer’s first-quarter FY26 results have met market expectations, driven by solid billings from ongoing projects and significant improvements in cost efficiencies. Despite a sequential dip in revenue attributed to a prior asset disposal, the company’s profitability saw a notable uplift.
Performance Review
The company recorded a core net profit of MYR50.1 million, representing a 23.7% increase year-on-year, which aligned with analysts’ forecasts. This robust performance was primarily underpinned by effective cost management strategies, leading to an expansion of the EBIT margin to 36.6% in 1QFY26, up from 30.7% in 4QFY25 and 32.7% in 1QFY25.
Sales Slowdown and Gearing
Despite the positive earnings, the quarter experienced a slowdown in property sales, totaling MYR153.5 million. This figure is a decrease from MYR247.4 million recorded in the preceding quarter, largely due to a lack of new project launches during the period. Contributions mainly came from existing projects such as Conlay, Maris, and The Lume. However, take-up rates for The Lume (60%) and Maris (45%) showed only modest sequential improvements.
Net gearing also saw a slight increase to 0.63x from 0.62x in 4QFY25, primarily to finance ongoing construction and reclamation activities. Furthermore, unbilled sales declined to MYR1.34 billion from MYR1.5 billion at the end of 4QFY25.
Robust Future Outlook
Looking ahead, management expresses optimism, forecasting a strong pipeline of MYR2.2 billion worth of projects slated for launch in FY26. This includes significant developments such as the maiden launch of the Elmina project (MYR990 million Gross Development Value), Senna and Fera Phase 3 & 4 (MYR306 million GDV), and a high-rise luxury condominium at Andaman Island (MYR1 billion GDV).
The company aims to achieve an ambitious sales target of MYR1.2 billion for FY26, a substantial increase from MYR843 million in FY25, by accelerating project launches in the second and third quarters of FY26. This aggressive launch schedule is anticipated to sustain healthy earnings growth over the next two to three years. Analyst firm TA SECURITIES maintains a “BUY” recommendation, citing the strong project pipeline as a key growth driver.
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