UOADEV’s FY22 results met our forecast but exceeded consensus estimates. FY22 sales of RM632m also came in line, backed by RM550m worth of launches. For FY23, it has earmarked >RM1b worth of launches to replenish its current low unbilled sales of RM203m. We maintain FY23F earnings and introduce FY24F earnings, and keep our MARKET PERFORM rating and TP of RM1.75.
Within expectations. FY22 core net profit of RM221m met our forecast but beat consensus estimate by 10%. Its full-year dividend of 10.0 sen is also in line with our forecast.
FY22 revenue decreased by 18% mainly due to lower ongoing developments due to the dearth of launches during the pandemic. However, core net profit rose 13% on stronger margins thanks to: (i) cost write-backs upon account finalisation for completed projects, and (ii) stronger rental and hospitality segment recovering from a pandemic-stricken period a year ago.
FY22 property sales of RM632m came within our RM650m target supported by RM550m of launches. For FY23, UOADEV is targeting more launches from: (i) Aster Hill (RM480m GDV), (ii) Desa Green (RM18m GDV), (iii) Vertical Office (RM1.3b GDV) of which a third would be earmarked for sale and the rest kept as rentals) and (iv) Bamboo Hills Residence (GDV to be confirmed). As at end-2022, its unbilled sales stood at RM203m from its sole ongoing development Laurel Residence.
We keep our FY23 earnings on sales assumption of RM700m and introduce FY24F earnings of RM237m backed by sales assumption of RM850m.
We maintain our TP of RM1.75 based on 55% discount to RNAV, lower than the 60%-65% discount ascribed on peers to reflect UOADEV’s land banks in matured locations making them highly monetisable. There is no adjustment to our TP based ESG given a 3-star rating as appraised by us (see Page 4).
We like UOADEV for: (i) its strategy to focus on mid-priced residential products amidst a soft property market, (ii) the highly sought-after addresses of its land banks in urban locations, (iii) the recovery of its hotel and MICE operations post reopening of economy and international borders, and (iv) a strong war chest (net cash of RM1.9b) for opportunistic M&As and land acquisitions. However, owing to the lack of launches over the last three years due to the pandemic, its unbilled sales has come off substantially to a low of RM203m (vs. pre-pandemic levels of >RM1b). Maintain MARKET PERFORM.
Risks to our call include: (i) a prolonged slowdown in the property, hospitality and MICE sectors, (ii) rising mortgage rates eroding affordability, and (iii) changes to urban development policies in the Klang Valley.
Source: Kenanga Research - 23 Feb 2023
