E&O (3417) : Eastern & Oriental - Newsflow the key driver
Target RM2.62 (Stock Rating: HOLD)
Though 1HFY3/15 net profit made up 30% of our full-year forecast and 29% of consensus estimates, it was broadly in line with expectations as 2H should make up for lost ground. E&O sold RM430m worth of properties in 1HFY15, behind its targeted full-year sales of RM1.2bn. However, investors are likely to keep newsflow as their focus rather than fundamentals. Reclamation works for STP2 should start in 1H 2015 and the stock should go ex of the PDS, bonus and free warrants in Jan. We retain our EPS forecasts and Hold call but lower our target price as we widen the target RNAV discount from 30% to 40% to factor in tough property market conditions. For exposure to the sector, we still prefer Eco World Development as it also has big ambitions in Penang.
Interims broadly in line
E&O’s interim results were broadly in line even though it achieved only 30% of our full-year net profit forecast and 29% of consensus. We expect 2H to be stronger as the group has RM831m worth of unbilled sales, up 16% qoq. As expected, E&O did not propose any interim dividend. 2Q net profit rose 12% qoq and 29% yoy on the back of higher progress work on the Penang Andaman condos.
1H sales of RM430m
E&O sold RM430m worth of properties in 1HFY15, up 26% from RM340m in 1HFY14. Roughly 25% of its new sales were from Penang, 15% from Kuala Lumpur and 60% from Johor. E&O is still keeping its FY15 new sales target of RM1.2bn and will rely on sales from Phase 2 of Avira in Medini, the final block of the Penang Andaman condos and the launch of its relatively affordable RM900m Tamarind condo in Seri Tanjung Pinang (STP) to achieve the target. 2Q sales increased 230% qoq and 35% yoy to RM330m.
Briefing highlights
At the usual interim results briefing, Deputy MD Eric Chan went through the operations of the group and gave an update on its various projects. E&O will undertake a major international launch of its Andaman final block to drive sales up from the current low take-up rate of 30%. The second batch of Avira terraced homes in Johor will be launched once the first batch raises its take-up from the current 60% to 80-90%.
Source: CIMB Daybreak - 01 December 2014
Target RM2.62 (Stock Rating: HOLD)
Though 1HFY3/15 net profit made up 30% of our full-year forecast and 29% of consensus estimates, it was broadly in line with expectations as 2H should make up for lost ground. E&O sold RM430m worth of properties in 1HFY15, behind its targeted full-year sales of RM1.2bn. However, investors are likely to keep newsflow as their focus rather than fundamentals. Reclamation works for STP2 should start in 1H 2015 and the stock should go ex of the PDS, bonus and free warrants in Jan. We retain our EPS forecasts and Hold call but lower our target price as we widen the target RNAV discount from 30% to 40% to factor in tough property market conditions. For exposure to the sector, we still prefer Eco World Development as it also has big ambitions in Penang.
Interims broadly in line
E&O’s interim results were broadly in line even though it achieved only 30% of our full-year net profit forecast and 29% of consensus. We expect 2H to be stronger as the group has RM831m worth of unbilled sales, up 16% qoq. As expected, E&O did not propose any interim dividend. 2Q net profit rose 12% qoq and 29% yoy on the back of higher progress work on the Penang Andaman condos.
1H sales of RM430m
E&O sold RM430m worth of properties in 1HFY15, up 26% from RM340m in 1HFY14. Roughly 25% of its new sales were from Penang, 15% from Kuala Lumpur and 60% from Johor. E&O is still keeping its FY15 new sales target of RM1.2bn and will rely on sales from Phase 2 of Avira in Medini, the final block of the Penang Andaman condos and the launch of its relatively affordable RM900m Tamarind condo in Seri Tanjung Pinang (STP) to achieve the target. 2Q sales increased 230% qoq and 35% yoy to RM330m.
Briefing highlights
At the usual interim results briefing, Deputy MD Eric Chan went through the operations of the group and gave an update on its various projects. E&O will undertake a major international launch of its Andaman final block to drive sales up from the current low take-up rate of 30%. The second batch of Avira terraced homes in Johor will be launched once the first batch raises its take-up from the current 60% to 80-90%.
Source: CIMB Daybreak - 01 December 2014
