UEMS (5148) - UEM Sunrise Bhd - A casualty of property slowdown
Target RM1.48 (Stock Rating: HOLD)
Uchi’s FY14 core EPS was largely in line, accounting for 104% of our and 99% of consensus full-year estimates. Core net profit rose 3.8% yoy, mainly driven by a lower effective tax rate following the approval of its pioneer status by MIDA. We raised our FY15-16 EPS forecast by 4-5% to account for potentially higher contribution from bio-tech segments this year as management plans to introduce several new products to drive growth. We maintain Hold rating with a higher target price of RM1.46 is based on 11.3x CY16 P/E (at a lower 25% discount to our target market P/E of 15x (vs 35% prev), as we expect Uchi to benefit from a stronger US$ and recovering economic environment in Europe, its main market. The stock offers an attractive FY15-16 yield of 7.2-7.5%. However, we prefer MPI for better exposure to tech stocks.
Finals below
UEMS’s final results were below expectations as core net profit made up only 86% of our forecast and 96% of consensus estimates. UEMS sold RM2.44bn worth of properties in 2014, 22% above its revised full-year target of RM2bn but 24% below its original target of RM3.2bn. The strong 4Q sales were driven by the successful maiden launch of its Australia project, without which it would have fared worse. We cut EPS forecasts for the poor results and adjust RNAV for housekeeping purposes, lowering our target price in the process. We make no changes to our Hold call and target basis of 50% discount to RNAV. For exposure to the property sector, we prefer Mah Sing or Eco World. Finals below UEMS's 2014 results disappointed and came in 14% below our forecast and 4% below consensus estimates. 4Q’s core net profit jumped 281% qoq and 249% yoy due to the recognition of a substantial land sale gain, including the RM523m joint venture with KL Kepong and the RM248m Motorsports City. UEMS proposed a first and final dividend of 3 sen, below our forecast and FY13's 4 sen.
2014 new sales of RM2.44bn
UEMS sold RM2.44bn worth of properties in 2014, a 19% yoy drop. 4Q14’s sales jumped nearly nine-fold qoq and more than doubled yoy to RM1.8bn. Of the full-year sales, only 11% came from its Nusajaya projects vs. 63% in 2013. Unrecognised revenue increased 37% qoq to RM3.9bn. Management expects new sales in 2015 to be around RM2bn, but the final and official target will only be announced later.
Conference call highlights
The focus of the post-results conference call was the performance in 2014 as well as launches and prospects for 2015. In terms of 2014's KPIs which included 1) revenue growth of 25%, 2) net profit growth of 10%, and 3) ROE of 10%, UEMS missed them all. Revenue grew by only 10%, net profit contracted by 17%, while ROE was only 7%. Note that the group will be holding an analyst briefing on 13 Mar during which new CEO En. Anwar Syahrin will present the group’s 2015 KPIs.
Source: CIMB Daybreak - 27 February 2015
Target RM1.48 (Stock Rating: HOLD)
Uchi’s FY14 core EPS was largely in line, accounting for 104% of our and 99% of consensus full-year estimates. Core net profit rose 3.8% yoy, mainly driven by a lower effective tax rate following the approval of its pioneer status by MIDA. We raised our FY15-16 EPS forecast by 4-5% to account for potentially higher contribution from bio-tech segments this year as management plans to introduce several new products to drive growth. We maintain Hold rating with a higher target price of RM1.46 is based on 11.3x CY16 P/E (at a lower 25% discount to our target market P/E of 15x (vs 35% prev), as we expect Uchi to benefit from a stronger US$ and recovering economic environment in Europe, its main market. The stock offers an attractive FY15-16 yield of 7.2-7.5%. However, we prefer MPI for better exposure to tech stocks.
Finals below
UEMS’s final results were below expectations as core net profit made up only 86% of our forecast and 96% of consensus estimates. UEMS sold RM2.44bn worth of properties in 2014, 22% above its revised full-year target of RM2bn but 24% below its original target of RM3.2bn. The strong 4Q sales were driven by the successful maiden launch of its Australia project, without which it would have fared worse. We cut EPS forecasts for the poor results and adjust RNAV for housekeeping purposes, lowering our target price in the process. We make no changes to our Hold call and target basis of 50% discount to RNAV. For exposure to the property sector, we prefer Mah Sing or Eco World. Finals below UEMS's 2014 results disappointed and came in 14% below our forecast and 4% below consensus estimates. 4Q’s core net profit jumped 281% qoq and 249% yoy due to the recognition of a substantial land sale gain, including the RM523m joint venture with KL Kepong and the RM248m Motorsports City. UEMS proposed a first and final dividend of 3 sen, below our forecast and FY13's 4 sen.
2014 new sales of RM2.44bn
UEMS sold RM2.44bn worth of properties in 2014, a 19% yoy drop. 4Q14’s sales jumped nearly nine-fold qoq and more than doubled yoy to RM1.8bn. Of the full-year sales, only 11% came from its Nusajaya projects vs. 63% in 2013. Unrecognised revenue increased 37% qoq to RM3.9bn. Management expects new sales in 2015 to be around RM2bn, but the final and official target will only be announced later.
Conference call highlights
The focus of the post-results conference call was the performance in 2014 as well as launches and prospects for 2015. In terms of 2014's KPIs which included 1) revenue growth of 25%, 2) net profit growth of 10%, and 3) ROE of 10%, UEMS missed them all. Revenue grew by only 10%, net profit contracted by 17%, while ROE was only 7%. Note that the group will be holding an analyst briefing on 13 Mar during which new CEO En. Anwar Syahrin will present the group’s 2015 KPIs.
Source: CIMB Daybreak - 27 February 2015
