KUALA LUMPUR: LBS Bina’s 9M18 core net profit was in line, at 62% of CIMB Equities Research and Bloomberg consensus full-year estimates.
“We deem the results in line as we expect a stronger 4Q18 due to higher revenue recognition from ongoing projects,” it said on Monday.
On the financial results for the nine months ended Sept 30, 2018, it said core net profit fell 1% on-year due to higher operating expenses (+11.2% on-year) arising from costlier staff and marketing costs.
As at end-September 2018, unbilled sales stood at RM1.7bn vs. RM1.5bn at end-September 2017.
The 9M18 new property sales stood at RM1.28bn vs. RM953m in 9M17, representing 71% of its FY18 sales target of RM1.8bn.
As at Nov 26, 2018, new property sales were at RM1.5bn, mainly driven by its projects in Bukit Jalil (RM451m), Alam Perdana (RM340m), Zenopy Residences (RM160m) and Cyber South (RM141m).
“As homebuyers are likely to defer their purchases to next year to enjoy the goodies from Budget 2019, we are concerned that developers might not be able to meet their targets for this year,” it said.
CIMB Research said at Nov 26, 2018, the group launched nine projects with a total gross development value (GDV) of RM1.2bn, including PPA1M Mercu Jalil (RM177m GDV), PPA1M Alam Perdana (RM44m GDV), Emerald Garden 2 (RM53m GDV), SkyLake Residence (RM190m GDV), Alam Perdana 2-storey link (RM189m), Alam Perdana Townhouse (RM175m), CyberSouth two-storey link/townhouse (RM325m) and Laman Bayu 2-storey link (RM48m). LBS plans to launch CyberSouth with a GDV of RM172m in 4Q18.
“LBS revised its FY18 total project launch GDV to RM1.4bn vs. RM1.48bn previously, largely due to the delays in projects in Alam Perdana. As such, we revise down our FY18-20F EPS forecasts by 4-6% to reflect the changes in our development timeline, project launch and new sales assumptions.
“We cut our TP to RM0.98 as we widen our RNAV discount to 45% (from 35%) to factor in the negative impact of some measures in Budget 2019 including: (i) Real Property Gains Tax (RPGT) rate hike, and (ii) a proposed 10% reduction in the prices of new houses.
“Maintain Add given the potential value arising from its China Zhuhai International Circuit (ZIC) upgrade. LBS is also poised to benefit from the increasing focus on affordable housing by the government, as the majority of its products are priced below RM500,000,” CIMB Research said.