Eastern and Oriental targets RM1.2b sales

KUALA LUMPUR: EASTERN & ORIENTAL BHD (E&O) is targeting to boost its FY15 sales to RM1.2bil, of which London would contribute RM280mil, Penang RM380mil, the Klang Valley RM60mil and Johor RM480mil, says CIMB Equities Research.


It said on Monday that at a semi-annual analyst briefing, the deputy managing director Eric Chan reassured analysts that the three-year combined net profit target of RM450mil to RM500mil "is still very much intact despite FY14's subdued earnings".


It said the results for the financial year ended March 31, 2014 were above expectations as net profit exceeded its forecast by 7%.


CIMB Research said this was due to strong recognition of profits from the Penang and Kuala Lumpur projects as management focused on accelerating construction works.


"E&O proposed a final single-tier dividend of three sen, which was below our forecast of 3.75 sen. We make no changes to our FY15/16 dividend forecast as we expect a rebound in earnings to boost dividends," it said.


The research house pointed out E&O sold RM730mil worth of properties in FY14, up 38% on-year but 27% below the original target of RM1bil. Some 51% of its new sales were from Penang and 49% from Kuala Lumpur.


However, the fourth quarter sales fell 26% on-quarter but rose 6% on-year to RM190mil. The relatively weak sales were because E&O failed to launch the last block of the Penang condos or Medini due to tougher property market conditions and slow approvals.


"This is a disappointment. Unbilled sales increased 25% to RM900mil," it said.

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