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MERCURY SECURITIES SDN BHD
(A Participating Organisation of Bursa Malaysia Securities Bhd.)
TP: RM0.64(→)
Last Closing Price: RM0.52
SkyWorld Development Bhd: Setting up base for PPVC Plant
SkyWorld has acquired four adjoining freehold parcels in Seberang Perai Tengah, Penang, totalling 26.37 acres for RM82.7m (RM72 psf) to support its upcoming affordable housing projects in the state. We view the land acquisition as a strategically advantageous, given its close proximity (12-15km) to its affordable housing development site in Penang. This location advantage should help to lower transportation costs for prefabricated modules, thereby supporting margin expansion and improving delivery efficiency. Besides, the planned PPVC manufacturing facility will not only support the execution of SkyWorld’s Penang affordable housing development pipeline but also enhance its ability to secure future large-scale affordable housing projects, supported by the PPVC plant’s estimated annual production capacity of ~3,600 residential units. We believe PPVC manufacturing will become a meaningful earnings contributor for SkyWorld as execution of its Penang affordable housing pipeline gathers momentum. We reiterate our BUY call with an unchanged TP of RM0.64, derived from 65% discount to our estimated RNAV of RM1.84 per share.
Key details.
SkyWorld, via its 70%-owned subsidiary Prefab Master Sdn. Bhd. and in turn through its wholly-owned unit Prefab Master (Penang) Sdn. Bhd. has entered into a Sale and Purchase Agreement with Mr. Tan Tio Cheng @ Tan Chow Cheng for the acquisition of four adjoining parcels of freehold land in Mukim 14, Daerah Seberang Perai Tengah, Pulau Pinang. The land, measuring a total of approximately 26.37 acres, are purchased for a total cash consideration of RM82.7m (equivalent to RM72 per sq ft).
Primary usage of the land.
SkyWorld plans to use the acquired parcels for the construction of a manufacturing facility dedicated to producing prefabricated and prefinished modular systems, which will support its upcoming joint development projects in Penang in collaboration with the Penang Development Corporation (PDC) and PDC Properties Sdn. Bhd. Recall that in December 2024, SkyWorld entered into a joint development agreement with these partners to deliver over 35,000 affordable housing units under the Rumah Bakat MADANI schemes with estimated total GDV of RM13bn over 15 years.
Our takes.
We view the land acquisition as strategically positive, given its close proximity (12-15km) to SkyWorld’s affordable housing development site in Penang. The close distance should translate into lower transportation costs for prefabricated modules, thereby enhancing project margins and improving delivery timelines. Besides, the new PPVC manufacturing facility will not only support the execution of its Penang affordable housing pipeline but also enhance its ability to secure future large-scale affordable housing projects, supported by the PPVC plant’s estimated annual production capacity of ~3,600 residential units. Furthermore, we believe PPVC manufacturing would form meaningful earning contributor to SkyWorld once its Penang affordable housing development gains execution momentum.
Our earnings forecast maintained.
We maintain our FY26-27 earnings forecasts as we expect minimal earning contribution from PPVC manufacturing in the near term. No change to our TP of RM0.64 based on a 65% discount to our estimated RNAV of RM1.84 per share. We continue to like SkyWorld for its strong position in the affordable housing segment (cushioned by strong demand and supportive government policy), strong earning visibility backed by robust RM2.2bn GDV project launches pipeline and PPVC adoption to support growth.
Business Overview
SkyWorld Development Berhad (SkyWorld), a property developer that focuses on the development of residential and commercial properties.
Share Price Performance
A line graph shows the share price performance from August 2024 to May 2025. The closing price (LHS) fluctuates between RM0.45 and RM0.60. The relative performance to FBMKLCI (RHS) shows a general upward trend, starting from around 80 and ending near 120.
Return Information
KLCI (pts) | 1,557.0 |
YTD KLCI chg. | (5.2) |
YTD Stock Price chg. | (8.0) |
Price Performance
1M | 3M | 12M | |
---|---|---|---|
Absolute (%) | 12.0 | 9.6 | (9.6) |
Relative to KLCI (%) | 10.6 | 8.9 | (7.2) |
Stock Information
Market Cap (RM m) | 515.0 |
Issued Shares (m) | 1,000.0 |
52-week High (RM) | 0.611 |
52-week Low (RM) | 0.380 |
Est. Free Float (%) | 33.5 |
Beta vs FBM KLCI | 1.22 |
3-month Avg Vol. (m) | 0.35 |
Shariah Compliant | Yes |
Bloomberg Ticker | SKYWLD MK |
Top 3 Shareholders
Shareholder | % |
---|---|
Datuk Seri Ng Thien Phing | 44.4 |
Datuk Lam Soo Keng @ Low Soo Keong | 10.3 |
Lee Chee Seng | 5.0 |
FY DEC (RM m)
FY25A | FY26E | FY27E | |
---|---|---|---|
Revenue | 445.4 | 548.7 | 932.1 |
EBITDA | 97.5 | 107.3 | 161.9 |
PBT | 82.8 | 87.4 | 140.6 |
Net Profit | 54.2 | 66.4 | 106.9 |
Core Net Profit | 54.2 | 66.4 | 106.9 |
Core EPS (sen) | 4.6 | 5.6 | 9.0 |
Core EPS Growth (%) | (49.1) | 22.6 | 60.9 |
Net DPS (sen) | 1.5 | 1.3 | 2.1 |
BV Per Share (sen) | 87.8 | 93.1 | 101.7 |
Net Div. Yield (%) | 2.9 | 2.6 | 4.2 |
P/E (x) | 11.3 | 9.2 | 5.7 |
P/B (x) | 0.6 | 0.6 | 0.5 |
ROE (%) | 6.2 | 7.1 | 10.5 |
Key Financial Data
Income Statement
FYE Dec | FY23 | FY24 | FY25 | FY26E | FY27E |
---|---|---|---|---|---|
Revenue | 841.4 | 688.0 | 445.4 | 548.7 | 932.1 |
EBITDA | 217.9 | 172.8 | 97.5 | 107.3 | 161.9 |
Depn & amort | 2.1 | 4.9 | 6.7 | 5.8 | 7.2 |
Net interest expense | (11.2) | (8.4) | (8.1) | (7.4) | (7.4) |
Pretax profit | 204.8 | 159.9 | 82.8 | 87.4 | 140.6 |
Taxation | (54.1) | (53.4) | (28.6) | (21.0) | (33.8) |
Net profit | 150.7 | 106.5 | 54.2 | 66.4 | 106.9 |
Core net profit | 150.7 | 106.5 | 54.2 | 66.4 | 106.9 |
Balance Sheet
FYE Dec | FY23 | FY24 | FY25 | FY26E | FY27E |
---|---|---|---|---|---|
PPE | 23.7 | 31.6 | 33.5 | 38.6 | 50.0 |
Trade and other receivables | 52.1 | 112.5 | 236.5 | 88.5 | 145.6 |
Contract Assets | 175.1 | 96.1 | 38.7 | 42.2 | 71.7 |
Tax asset | 12.6 | 15.3 | 16.3 | 16.3 | 16.3 |
Other assets | 816.6 | 803.3 | 849.3 | 744.2 | 840.1 |
Deposit, bank and cash | 237.7 | 499.9 | 349.6 | 646.3 | 659.3 |
Assets | 1,317.7 | 1,558.6 | 1,523.8 | 1,559.9 | 1,766.8 |
LT borrowings | 323.9 | 276.1 | 188.8 | 188.8 | 188.8 |
ST borrowings | 159.2 | 213.4 | 260.4 | 260.4 | 260.4 |
Payables | 212.4 | 196.1 | 184.3 | 167.2 | 288.6 |
Other liabilities | 6.5 | 30.1 | 12.2 | 12.2 | 12.2 |
Liabilities | 702.0 | 715.8 | 645.7 | 628.6 | 750.1 |
Share capital | 62.5 | 245.0 | 245.0 | 245.0 | 245.0 |
Reserves and retained earning | 547.3 | 601.1 | 633.2 | 686.3 | 771.8 |
Shareholder’s equity | 609.8 | 846.1 | 878.1 | 931.3 | 1,016.8 |
NCI | 5.9 | (3.3) | (0.0) | (0.0) | (0.0) |
Equity | 615.7 | 842.8 | 878.1 | 931.2 | 1,016.7 |
Equity and Liabilities | 1,317.7 | 1,558.6 | 1,523.8 | 1,559.9 | 1,766.8 |
Cash Flow Statement
FYE Dec | FY23 | FY24 | FY25 | FY26E | FY27E |
---|---|---|---|---|---|
Profit before taxation | 204.8 | 159.9 | 82.8 | 87.4 | 140.6 |
Depreciation & amortisation | 2.1 | 4.9 | 6.7 | 5.8 | 7.2 |
Changes in working capital | (203.3) | 47.9 | (131.6) | 248.7 | (61.0) |
Net interest received/ (paid) | (24.8) | (28.5) | (14.5) | (14.0) | (14.0) |
Tax paid | (79.3) | (49.6) | (39.4) | (21.0) | (33.8) |
Others | 12.8 | 18.3 | 4.9 | 7.4 | 7.4 |
Operating Cash Flow | (87.8) | 153.0 | (91.3) | 314.4 | 46.4 |
Capex | (26.1) | (26.1) | (8.7) | (11.0) | (18.6) |
Others | 3.9 | (53.8) | 29.4 | 6.6 | 6.6 |
Investing Cash Flow | (22.2) | (79.9) | 20.8 | (4.4) | (12.0) |
Issuance of shares | – | 166.4 | – | – | – |
Changes in borrowings | 144.2 | (15.0) | (42.0) | – | – |
Dividends paid | – | (42.5) | (15.0) | (13.3) | (21.4) |
Others | (0.0) | (4.0) | (0.0) | – | – |
Financing Cash Flow | 144.2 | 104.9 | (57.0) | (13.3) | (21.4) |
Net cash flow | 34.2 | 178.1 | (127.5) | 296.7 | 13.0 |
Beginning cash | 189.4 | 223.4 | 402.2 | 270.4 | 567.2 |
Ending cash | 223.6 | 401.5 | 274.7 | 567.2 | 580.2 |
Key Statistics & Ratios
FYE Dec | FY23 | FY24 | FY25 | FY26E | FY27E |
---|---|---|---|---|---|
Growth | |||||
Revenue | 6.4% | -18.2% | -35.3% | 23.2% | 69.9% |
EBITDA | 29.9% | -20.7% | -43.5% | 10.0% | 50.9% |
Pretax profit | 36.5% | -21.9% | -48.2% | 5.6% | 60.9% |
Net profit | 44.5% | -29.3% | -49.1% | 22.6% | 60.9% |
Core EPS | -3.6% | -29.3% | -49.1% | 22.6% | 60.9% |
Profitability | |||||
EBITDA margin | 25.9% | 25.1% | 21.9% | 19.6% | 17.4% |
Net profit margin | 17.9% | 15.5% | 12.2% | 12.1% | 11.5% |
Effective tax rate | 26.4% | 33.4% | 34.5% | 24.0% | 24.0% |
ROA | 11.4% | 6.8% | 3.6% | 4.3% | 6.0% |
ROE | 24.5% | 12.6% | 6.2% | 7.1% | 10.5% |
Leverage | |||||
Debt/ Assets (x) | 0.37 | 0.31 | 0.29 | 0.29 | 0.25 |
Debt/ Equity (x) | 0.78 | 0.58 | 0.51 | 0.48 | 0.44 |
Net debt/ equity (x) | 0.4 | Net Cash | 0.1 | Net Cash | Net Cash |
Key Drivers | |||||
GP margin | 35.5% | 36.8% | 37.2% | 36.0% | 35.0% |
PBT margin | 24.3% | 23.2% | 18.6% | 15.9% | 15.1% |
Unbilled sales (RM m) | 944.6 | 548.1 | 461.2 | 1,025.4 | 1,864.3 |
Valuation | |||||
EPS (sen) | 12.7 | 9.0 | 4.6 | 5.6 | 9.0 |
Core EPS (sen) | 12.7 | 9.0 | 4.6 | 5.6 | 9.0 |
P/E (x) | 4.1 | 5.7 | 11.3 | 9.2 | 5.7 |
EV/ EBITDA (x) | 3.5 | 2.9 | 6.3 | 3.0 | 1.3 |
Net DPS (sen) | – | 2.3 | 1.5 | 1.3 | 2.1 |
Yield | 0.0% | 4.4% | 2.9% | 2.6% | 4.2% |
BV per share (RM) | 0.62 | 0.84 | 0.88 | 0.93 | 1.12 |
P/BV (X) | 0.8 | 0.6 | 0.6 | 0.6 | 0.5 |
Disclaimer & Disclosure of Conflict of Interest
The information contained in this report is based on data obtained from data and sources believed to be reliable at the time of issue of this report. However, the data and/or sources have not been independently verified and as such, no representation, express or implied, are made as to the accuracy, adequacy, completeness or reliability of the information or opinions in this report.
This report may contain forward-looking statements which are often but not always identified by the use of words such as “believe”, “estimate”, “intend” and “expect” and statements that an event or result “may”, “will” or “might” occur or be achieved and other similar expressions. Such forward-looking statements are based on assumptions made and information currently available to Mercury Securities Sdn Bhd. (“Mercury Securities”) and are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievement to be materially different from any future results, performance or achievement, expressed or implied by such forward-looking statements. Caution should be taken with respect to such statements and recipients of this report should not place undue reliance on any such forward-looking statements. Mercury Securities expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or circumstances after the date of this publication or to reflect the occurrence of unanticipated events.
This report does not have regard to the specific investment objectives, financial situation and particular needs of any specific person. Accordingly, investors are advised to make their own independent evaluation of the information contained in this report and seek advice from, amongst others, tax, accounting, financial planner, legal or other business professionals regarding the appropriateness of investing in any securities or the investment strategies discussed or recommended in this report. Nothing in this report constitutes investment, legal, accounting or tax advice or a representation that any investment or strategy is suitable or appropriate to your individual circumstances or otherwise represents a personal recommendation to you. This report is not intended, and should not under no circumstances be considered as an offer to sell or a solicitation of any offer or a solicitation or expression of views to influence any one to buy or sell the securities referred to herein or any related financial instruments.
The views expressed in this research report accurately reflect the analyst’s personal views about any and all of the subject securities or issuers; and no part of the research analyst’s compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in the report.
This report has been prepared by research analyst(s) of Mercury Securities pursuant to the Research Incentive Program under Bursa Research Incentive Scheme Plus (“Bursa RISE+”) administered by Bursa Malaysia Berhad. This report has been produced independent of any influence from Bursa Malaysia Berhad or the subject company. Bursa Malaysia Berhad and its group of companies disclaim any and all liability, howsoever arising, out of or in relation to the administration of Bursa Research Incentive Program and/or this report. This research report can also be found in the Bursa Marketplace or via the link: https://www.bursamarketplace.com/mkt/tools/research.
Recommendation Rating
- BUY
- Stock’s total return is expected to be +10% or better over the next 12 months (including dividend yield)
- HOLD
- Stock’s total return is expected to be within +10% or -10% over the next 12 months (including dividend yield)
- SELL
- Stock’s total return is expected to be -10% or worse over the next 12 months (including dividend yield)
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