SBCCORP (5207) - SBC Corp - Still waiting for the OK for JQ
Target RM1.76 (Stock Rating: ADD)
At an annualised 100% of our FY15 net profit forecast, SBC’s 9MFY15 net profit was in line with expectations. Overall, sales remained weak mainly due to delays in the Kota Kinabalu Jesselton Quay (JQ) launch. We maintain our EPS forecasts but target price falls as we widen our discount to its RNAV from 50% to 60% to reflect weak property market outlook. However, investor sentiment could turn positive with the impending JQ launch (targeted for Mar 2015). We maintain our Add rating, with potential rerating catalysts that include securing state government approval for the JQ project, and the current huge 78% share price discount to its RNAV.
9MFY15 net profit down 43%
SBC’s 9MFY15 revenue was 20% lower yoy, while its net profit decline was a sharper 43%. This was not a surprise as sales was affected by the overall softer property market sentiment in the past year. No interim dividend was declared, in line with our expectations. Even its 50%-owned associate’s low-medium cost development project in Batang Kali was affected by slower sales.
Still waiting JQ approval
The company is still awaiting state approval to kick-start the launch of the Jesselton Quay (JQ), East Malaysia’s only integrated waterfront project, located in Kota Kinabalu. Earlier, we were hoping for a mid-2014 launch, but this was not to be, mainly due to delays in securing approvals for the overall Master Plan for the development around the JQ area. We understand that most of the issues have already been resolved, and SBC may at long last proceed with the maiden launch for JQ. However, the timing delay could affect JQ’s sales take-up rates during its launch. The overall property markets in both Peninsular and East Malaysia have slowed since 2014, and this trend could continue into 2015. On the positive side, with the recent declines in commodity prices, building material costs for the company could be much lower than a year ago. We are expecting JQ’s maiden launch sometime in Mar 2015.
RM160m outstanding sales
We estimate that SBC’s outstanding sales stand at around RM160m. Current sales have been soft, which is not surprising in current market conditions. However, sales should see a major boost when the company kicks off its maiden launch for JQ.
Source: CIMB Daybreak - 12 February 2015
Target RM1.76 (Stock Rating: ADD)
At an annualised 100% of our FY15 net profit forecast, SBC’s 9MFY15 net profit was in line with expectations. Overall, sales remained weak mainly due to delays in the Kota Kinabalu Jesselton Quay (JQ) launch. We maintain our EPS forecasts but target price falls as we widen our discount to its RNAV from 50% to 60% to reflect weak property market outlook. However, investor sentiment could turn positive with the impending JQ launch (targeted for Mar 2015). We maintain our Add rating, with potential rerating catalysts that include securing state government approval for the JQ project, and the current huge 78% share price discount to its RNAV.
9MFY15 net profit down 43%
SBC’s 9MFY15 revenue was 20% lower yoy, while its net profit decline was a sharper 43%. This was not a surprise as sales was affected by the overall softer property market sentiment in the past year. No interim dividend was declared, in line with our expectations. Even its 50%-owned associate’s low-medium cost development project in Batang Kali was affected by slower sales.
Still waiting JQ approval
The company is still awaiting state approval to kick-start the launch of the Jesselton Quay (JQ), East Malaysia’s only integrated waterfront project, located in Kota Kinabalu. Earlier, we were hoping for a mid-2014 launch, but this was not to be, mainly due to delays in securing approvals for the overall Master Plan for the development around the JQ area. We understand that most of the issues have already been resolved, and SBC may at long last proceed with the maiden launch for JQ. However, the timing delay could affect JQ’s sales take-up rates during its launch. The overall property markets in both Peninsular and East Malaysia have slowed since 2014, and this trend could continue into 2015. On the positive side, with the recent declines in commodity prices, building material costs for the company could be much lower than a year ago. We are expecting JQ’s maiden launch sometime in Mar 2015.
RM160m outstanding sales
We estimate that SBC’s outstanding sales stand at around RM160m. Current sales have been soft, which is not surprising in current market conditions. However, sales should see a major boost when the company kicks off its maiden launch for JQ.
Source: CIMB Daybreak - 12 February 2015
