Lagenda Properties Berhad - Single quarter record high sales
Tue, 26-Nov-2024 07:13 am
by Research Team • Apex Research

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LAGENDA (7179)

Target Price (RM)

1.64

Recommendation

Buy

Summary

  • 9MFY24 core net profit to RM138.4m (+25.6% yoy) came in slightly below ours and consensus expectations at 67.7% and 68.7% of full-year forecast of RM204.4m and RM201.5m respectively.

  • Earnings growth will be backed by improved unbilled sales amounting to RM835.2m alongside with sizeable landbank of c.5,200-ac spread across Peninsular Malaysia that carries a potential combined GDV of RM14.49bn.

  • Trimmed our earnings forecast by -8.0%/-7.3%/-3.0% to RM188.0m/RM225.0m/RM255.2m for FY24F/FY25F/FY26F to account for the higher-than-expected finance cost. Maintain BUY recommendation with slightly lower TP of RM1.64, based on 30% discount to RNAV.

     

Results Review

  • Results review. 3QFY24 core net profit rose (CNP) +45.8% yoy, but fell marginally by -2.3% qoq to RM47.3m, as the improved yoy performance was supported by stronger contributions form new projects such as Darulaman Lagenda Phase 3A, Lagenda Suria Phases 1A and 1B, Puncak Warisan Phase 1 and Lagenda Aman alongside with pickup in construction billings. Revenue for the quarter added +14.2% yoy and +15.3% qoq to RM283.4m – single quarter record high.

 

  • Results slightly off. CNP in 9MFY24 at RM138.4m (+25.6% yoy) represents 67.7%/68.7% of ours and consensus CNP forecast at RM204.4m/RM201.5m. The slight deviation was mainly attributed to higher-than-expected finance cost following the additions in borrowings for the acquisition of three plots of land measuring 855-ac at Mukim Pinang Tunggal, Daerah Kuala Muda, Negeri Kedah for RM149.0m that is expected to be completed in 1Q25 as well as higher construction billings which yields lower margins.

 

  • Operations Highlights. In 3QFY24, LAGENDA raked in single-quarter record high new sales of RM349.0m, representing an uptick against RM297.1m in the previous corresponding quarter. This came following the launch of four new projects totaling c.2,600 units with collective GDV of RM829.0m.

 

  • Industry Highlights. We foresee the salary hike for civil servants which will take effect on 1 Dec 2024 is expected to boost demand for affordable housing projects. Higher disposal income of civil servants bodes well for LAGENDA’s bread and butter business, of which majority of the Group’s property units are priced at c.RM250,000/unit of single store terrace house.

 

  • Outlook. Moving forward, LAGENDA will be equipped with balance landbank of c.5,200-ac spread across Peninsular Malaysia with a potential combined GDV of RM14.49bn which will sustain developments over the next 8-10 years. Unbilled sales rose to RM835.2m (from RM743.5m in 2QFY24) alongside with bookings of RM306.5m will sustain revenue visibility for the next 12-18 months.

  • Valuation. Trimmed our CNP forecast by -8.0%/-7.3%/-3.0% to RM188.0m/RM225.0m/RM255.2m for FY24F/FY25F/FY26F to account for higher-than-expected finance cost. We maintain our BUY recommendation on LAGENDA with a slightly lower target price of RM1.64, based on 30% discount rate to RNAV.

  • Risk. Inability to replenish landbank, rising construction costs beyond expectations, and changes in housing as well as property regulations.

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