Stocks In Focus MY (Hua Yang, IJM Land, Malaysian Pacific Industries) – 23/01/15
HUAYANG (5062), IJMLAND (5215), MPI (3867)
Kenanga Research Reduces Sales Earnings Estimates For Hua Yang
Kenanga Research predicts a weak property market over the next six to nine months, thus reducing its 2015 and 2016 sales earnings estimates for Hua Yang by 14 percent and 12 percent to RM501 million and RM529 million respectively.
The research house said the company’s unbilled sales remain unchanged at RM733 million, with at least 1.5 years earnings visibility. It believes that its management should be able to replenish its land bank over the 12 months as it already had a RM250 million Sukuk programme for such purposes.
It noted that the firm’s 9M15 core earnings surged 82 percent year-on-year from RM44.4 million to RM80.9 million. It felt that this impressive performance was driven by revenue improvement from strong billings and expansion in earnings before interest, taxes, depreciation and amortisation margins as a result of higher recognition from existing projects.
Significance: Kenanga Research has downgraded Hua Yang to ‘Market Perform’ because of its two consecutive disappointments in property sales, the more challenging property landscape and the fact that its net gearing could exceed 0.5 times should there be any sizeable land banking despite maintaining its target price of RM2.20.
IJM Land Bullish On Sherwood Project In Puchong
IJM Land is optimistic that its “re-imagined” Sherwood development at Kinrara South Puchong, which has bungalows priced from RM2.9 million each, will be fully sold before year-end in spite of the weakening property market.
The company is slightly wary of prospects in the property market but feels that developers will have made adjustments to prices in anticipation of the goods and services tax which would be implemented from 1 April and that a weakening ringgit will make Malaysian properties more attractive to foreigners. Hence, it has a number of launches in the pipeline.
The firm will be launching Royal Mints Garden Phase 2 in London at the end of 2015. It will also be launching the second phase of Pantai Sentral Park in Kuala Lumpur and the fifth phase of Bandar Rimbayu in Shah Alam in the next few months. Meanwhile, the firm is on the search for more opportunities in London.
Significance: The company would be looking into property investments to grow recurring income. If its privatization by its parent, IJM Corporation, is successful, it will expedite its growth since its balance sheet will be strengthened by its leveraging on IJM Corp’s balance sheet.
MPI 2Q15 Net Profit Soars To RM24m
Malaysian Pacific Industries (MPI)’s 2Q15 net profit tripled from RM8.1 million in the same period a year ago to RM24.1 million on the back of a 6.9 percent rise in revenue to RM338.3 million.
The better earnings were attributed to higher revenue in the smartphone sector, a strengthening US dollar and lower material costs attributed to the ongoing decline in commodity prices.
For the six-month period, top and bottom lines registered growth of 2.9 percent and 69.6 percent to RM666 million and RM44 million respectively. Notably, the revenue mix for Asia and Europe increased by two percentage point and four percentage point respectively, while US declined by six percentage point.
Significance: Moving forward, the company expects industry growth to moderate in the coming quarters and foresees a satisfactory group performance in FY15 if all goes well. It was noted that the strengthening of the US dollar against the local currency has increased investor interest in the sector, given that it exports most of its products overseas.
http://www.sharesinv.com/
HUAYANG (5062), IJMLAND (5215), MPI (3867)
Kenanga Research Reduces Sales Earnings Estimates For Hua Yang
Kenanga Research predicts a weak property market over the next six to nine months, thus reducing its 2015 and 2016 sales earnings estimates for Hua Yang by 14 percent and 12 percent to RM501 million and RM529 million respectively.
The research house said the company’s unbilled sales remain unchanged at RM733 million, with at least 1.5 years earnings visibility. It believes that its management should be able to replenish its land bank over the 12 months as it already had a RM250 million Sukuk programme for such purposes.
It noted that the firm’s 9M15 core earnings surged 82 percent year-on-year from RM44.4 million to RM80.9 million. It felt that this impressive performance was driven by revenue improvement from strong billings and expansion in earnings before interest, taxes, depreciation and amortisation margins as a result of higher recognition from existing projects.
Significance: Kenanga Research has downgraded Hua Yang to ‘Market Perform’ because of its two consecutive disappointments in property sales, the more challenging property landscape and the fact that its net gearing could exceed 0.5 times should there be any sizeable land banking despite maintaining its target price of RM2.20.
IJM Land Bullish On Sherwood Project In Puchong
IJM Land is optimistic that its “re-imagined” Sherwood development at Kinrara South Puchong, which has bungalows priced from RM2.9 million each, will be fully sold before year-end in spite of the weakening property market.
The company is slightly wary of prospects in the property market but feels that developers will have made adjustments to prices in anticipation of the goods and services tax which would be implemented from 1 April and that a weakening ringgit will make Malaysian properties more attractive to foreigners. Hence, it has a number of launches in the pipeline.
The firm will be launching Royal Mints Garden Phase 2 in London at the end of 2015. It will also be launching the second phase of Pantai Sentral Park in Kuala Lumpur and the fifth phase of Bandar Rimbayu in Shah Alam in the next few months. Meanwhile, the firm is on the search for more opportunities in London.
Significance: The company would be looking into property investments to grow recurring income. If its privatization by its parent, IJM Corporation, is successful, it will expedite its growth since its balance sheet will be strengthened by its leveraging on IJM Corp’s balance sheet.
MPI 2Q15 Net Profit Soars To RM24m
Malaysian Pacific Industries (MPI)’s 2Q15 net profit tripled from RM8.1 million in the same period a year ago to RM24.1 million on the back of a 6.9 percent rise in revenue to RM338.3 million.
The better earnings were attributed to higher revenue in the smartphone sector, a strengthening US dollar and lower material costs attributed to the ongoing decline in commodity prices.
For the six-month period, top and bottom lines registered growth of 2.9 percent and 69.6 percent to RM666 million and RM44 million respectively. Notably, the revenue mix for Asia and Europe increased by two percentage point and four percentage point respectively, while US declined by six percentage point.
Significance: Moving forward, the company expects industry growth to moderate in the coming quarters and foresees a satisfactory group performance in FY15 if all goes well. It was noted that the strengthening of the US dollar against the local currency has increased investor interest in the sector, given that it exports most of its products overseas.
http://www.sharesinv.com/
