SkyWorld Development Berhad - Below expectations, but recovery on sight
Mon, 25-Nov-2024 07:09 am
by Team coverage • Apex Research

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SKYWLD (5315)

Target Price (RM)

0.55

Recommendation

Hold

Summary

  • SKYWLD 6MFY25 core net profit (CNP) at RM24.5m (-59.9% yoy) came below expectations, constituting to only 29.9% and 13.5% of ours and consensus forecast respectively, affected by completion of SkyAwani IV Residences and SkyAwani V Residences in FY24.

  • Slashed our CNP forecast by -30.7%/-26.1% to RM57.7m/RM81.1m for FY25F/FY26F respectively to account for slower-than-expected revenue recognition from on-going projects.

  • Maintained our HOLD recommendation, but with a lower target price of RM0.55, based discount rate of 20% to our RNAV. 

     

Results Review

  • Results review. 2QFY25 core net profit (CNP) slipped -24.0% yoy, but rose +45.4% qoq to RM14.5m, as the weaker yoy performance was affected by completion of SkyAwani IV Residences and SkyAwani V Residences in FY24. Revenue for the quarter stood at RM124.3m (-16.2% yoy, +25.8% qoq). A first interim dividend of 0.5 sen per share, payable on 30 Dec 24 was declared. 

 

  • Below expectations. 6MFY25 reported core net profit at RM24.5m (-59.9% yoy) came below expectations, accounting to only 29.9% and 31.5% of ours and consensus expectations at RM82.0m and RM77.8m respectively. Key deviation is mainly due to slower-than-expected recognition from on-going projects. 

 

  • Operations Highlights. As at end of 2QFY25, SKYWLD's unbilled sales rose to RM592.0m, from RM555.0m in 1QFY25, implying 0.9x of FY24 revenue that is sufficient to maintain revenue visibility for the next 12 months. The Group maintained a lean balance sheet, equipped with a net cash position that is supported by RM437.2m in cash and bank balances as at end-2QFY25.

 

  • Industry Highlights. Malaysia property landscape remain vibrant with housing loan applications rose 6.1% yoy, while loan approval rate hovered above 40% during the period. According to NAPIC, transaction volume climbed 3.1% yoy to 112,305 units, while overhang units fell -3.0% qoq to 21,968 units during the quarter. We anticipate the property sector will remain vibrant in the foreseeable future, driven by stable household income growth and sustained demand.

 

  • Outlook. Looking ahead, SKYWLD will be kept busy with four on-going developments namely SkyVouge Residences, EdgeWood Residences, Curvo Residences and Vesta Residences with a collective GDV of RM1.96bn. Overall average take-up rate remains healthy at 92.6% as at end-2QFY25.

 

  • Valuation. Slashed our CNP forecast by -30.7%/-26.1% to RM57.7m/RM81.1m for FY25F/FY26F respectively to account for slower-than-expected revenue recognition from on-going projects. Maintained our HOLD recommendation on SKYWLD, but with a lower target price of RM0.55, based discount rate of 20% to our RNAV.

 

  • Risk. Land scarcity, potential construction cost increases, and regulatory changes, could hamper future development.

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