SkyWorld Development Bhd - Another sluggish quarter
Mon, 24-Feb-2025 07:29 am
by Team Coverage • Apex Research

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SKYWLD (5315)

Target Price (RM)

0.490

Recommendation

Hold

Summary

  • SKYWLD 3QFY25 core net profit (CNP) sank -47.0% yoy and -8.3% qoq to RM13.3m, bringing 9MFY25 CNP at RM37.8m (-56.1% yoy) came below expectations, constituting to only 65.5% and 67.1% of ours and consensus forecast respectively.

  • Slashed our CNP forecast by -19.7%/-36.4% to RM46.3m/RM51.6m for FY25F/FY26F respectively to account for slower-than-expected revenue recognition from on-going projects and introduced FY27F CNP at RM60.5m.

  • Maintained our HOLD recommendation, but with a lower target price of RM0.49, based discount rate of 30% to our revised RNAV and appraised with three-star ESG rating.

 

Results below expectations. 9MFY25 core net profit at RM37.8m (-56.1% yoy) came below expectations, accounting to 65.5% of our core net profit forecast at RM57.7m and was at 67.1% of consensus forecasted net profit of RM56.3m.

 

YoY. 3QFY25 core net profit sank -47.0% yoy to RM13.3m, dragged down by lower progressive revenue recognition from EdgeWood Residences that is at the tail end of completion. Revenue for the quarter slipped -37.0% yoy to RM107.9m. 

 

QoQ. Core net profit decreased by -8.3% qoq to RM13.3m, on the back of slight uptick in tax expenses that was under-provisioned in prior years. Revenue for the quarter declined -13.2% qoq to RM107.9m. Still, we gather that core net margins improved to 12.3% vis-à-vis 11.7% in 2QFY25, lifted by higher billing stages from Curvo Residences and Vesta Residences.

 

Outlook. Unbilled sales of RM622.6m as at end-3QFY25 (up from RM592.0m as at end-2QFY25) will be recognised progressively over the next three years. Longer-term perspective may yield more stability with the development of >35,000 affordable housing units in Penang, with an estimated GDV worth approximately RM13.0bn to be launch in CY26.

 

Earnings Revision. Slashed our CNP forecast by -19.7%/-36.4% to RM46.3m/RM51.6m for FY25F/FY26F respectively to account for slower-than-expected revenue recognition from on-going projects and introduced FY27F CNP at RM60.5m.

 

Valuation. Maintained our HOLD recommendation on SKYWLD, but with a lower target price of RM0.49, based discount rate of 30% to our RNAV and appraised with three-star ESG rating.

 

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

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