E&O (3417) - Eastern & Oriental - Regaining lost ground in 4QFY15
Target RM2.25 (Stock Rating: HOLD)
Though 9MFY3/15 net profit made up only 39% of our full-year forecast and 35% of consensus estimates, it was broadly in line with expectations as 4Q should be much stronger, thanks to the maiden launch of the Tamarind condo in Penang and efforts to boost the sales of other projects. E&O sold RM439m worth of properties during the period, behind its targeted full-year sales of RM1.2bn. Sales should play catch-up in 4Q as the RM900m Tamarind condo project should enjoy strong take-up given its attractive average selling price of RM730 psf. We retain our EPS forecasts, Hold call and target price basis of 50% discount to RNAV. For exposure to the sector, we still prefer Eco World Development which also has big ambitions in Penang.
9M results in line
E&O’s 9M results were broadly in line even though it achieved only 39% of our full-year net profit forecast and 35% of consensus numbers. We expect 4Q to be stronger as the group is embarking on campaigns to push sales in its Johor and Penang projects. The group’s unbilled sales increased 8% qoq from RM831m in 2Q to RM901m. As expected, E&O did not propose any 3Q dividends.
9M sales of RM439m
E&O sold RM439m worth of properties in 9MFY15, down 19% from RM540m in 9MFY14. Some 28% of its new sales were from Penang, 19% from Kuala Lumpur, 44% from Johor and 9% from London. 3Q sales plunged 97% qoq and 95% yoy to only RM9m as the group did not undertake any launches during the period. 4Q sales should improve significantly as the group has soft-launched the RM900m Tamarind condo project in Penang. The response to the first block in Tamarind with a GDV of RM450m has been strong, with over 90% of the 552 units booked. This is not surprising given that 80% of the units are priced below RM1m and, at an average of RM730 psf, are much cheaper than the neighbouring Andaman condos which are priced at RM1,300-1,500 psf.
Briefing highlights
Deputy MD Eric Chan has been engaging analysts more frequently of late and also invited analysts for an afternoon tea session today to discuss the results. E&O guided for a much stronger 4Q, both in terms of sales and the group's financial performance.
Source: CIMB Daybreak - 02 March 2015
Target RM2.25 (Stock Rating: HOLD)
Though 9MFY3/15 net profit made up only 39% of our full-year forecast and 35% of consensus estimates, it was broadly in line with expectations as 4Q should be much stronger, thanks to the maiden launch of the Tamarind condo in Penang and efforts to boost the sales of other projects. E&O sold RM439m worth of properties during the period, behind its targeted full-year sales of RM1.2bn. Sales should play catch-up in 4Q as the RM900m Tamarind condo project should enjoy strong take-up given its attractive average selling price of RM730 psf. We retain our EPS forecasts, Hold call and target price basis of 50% discount to RNAV. For exposure to the sector, we still prefer Eco World Development which also has big ambitions in Penang.
9M results in line
E&O’s 9M results were broadly in line even though it achieved only 39% of our full-year net profit forecast and 35% of consensus numbers. We expect 4Q to be stronger as the group is embarking on campaigns to push sales in its Johor and Penang projects. The group’s unbilled sales increased 8% qoq from RM831m in 2Q to RM901m. As expected, E&O did not propose any 3Q dividends.
9M sales of RM439m
E&O sold RM439m worth of properties in 9MFY15, down 19% from RM540m in 9MFY14. Some 28% of its new sales were from Penang, 19% from Kuala Lumpur, 44% from Johor and 9% from London. 3Q sales plunged 97% qoq and 95% yoy to only RM9m as the group did not undertake any launches during the period. 4Q sales should improve significantly as the group has soft-launched the RM900m Tamarind condo project in Penang. The response to the first block in Tamarind with a GDV of RM450m has been strong, with over 90% of the 552 units booked. This is not surprising given that 80% of the units are priced below RM1m and, at an average of RM730 psf, are much cheaper than the neighbouring Andaman condos which are priced at RM1,300-1,500 psf.
Briefing highlights
Deputy MD Eric Chan has been engaging analysts more frequently of late and also invited analysts for an afternoon tea session today to discuss the results. E&O guided for a much stronger 4Q, both in terms of sales and the group's financial performance.
Source: CIMB Daybreak - 02 March 2015
