Lagenda Properties Bhd - Modest start with slight miss
Wed, 28-May-2025 12:09 pm
by Research Team • Apex Research

Counter

LAGENDA (7179)

Target Price (RM)

1.530

Recommendation

Buy

  • LAGENDA’s 1QFY25 CNP came in at RM42.3m (-0.8% yoy, +42.5% qoq). The results were below expectations, accounting for 19.2% of our full-year forecast and 19.5% of consensus estimates.

  • We expect earnings to remain soft, qoq as revenue recognition is expected to be backloaded.

  • Trimmed our earnings forecasts by -9.1%/-4.5% to RM201.1m/RM252.5m for FY25F/FY26F, to account for slower-than-expected construction progress for newly launched projects and slower take-up rate for projects in Perak. 

  • Maintain our BUY recommendation with a lower target price of RM1.53 (from RM1.55), based on 30% discount to our RNAV valuation and appraised with a three-star ESG rating.

 

Results below expectations. Excluding the fair value gain on other investment (RM2.2m), 1QFY25 CNP came in at RM42.3m (-0.8 yoy, 42.5% qoq). The result was below expectations, accounting for 19.1%/19.5% of our full year forecast and consensus estimate (RM221.2m/RM217.3m), respectively. 

 

YoY. CNP slipped marginally by 0.8% yoy to RM42.4m despite a 17.2% increase in overall revenue. This was mainly due to higher financing costs and one-off cost adjustments related to the completion of projects within the Bandar Baru Setia Awan Perdana (BBSAP) township. Additionally, the completion of projects in the BBSAP and Lagenda Teluk Intan townships led to reduced demand for building materials, resulting in a 21.3% decline in revenue from the trading segment to RM56.9m (from RM72.3m).

 

QoQ. On a sequential basis, CNP surged 42.5% qoq to RM42.4m, driven by increased revenue recognition from ongoing projects, of Lagenda Ardea Phase 1A and Lagenda Suria Phase 1A. This was further supported by the absence of major one-off expenses that weighed down the previous quarter. 

 

Outlook. Looking ahead, LAGENDA remains on a solid growth trajectory, supported by strong unbilled sales of RM898.9m, which will be recognised progressively over the next three years. While a slower take-up rate is expected in Perak due to affordability concerns following price adjustments in new launches, contributions from newly launched projects in Johor and Kedah are expected to cushion the impact. Notably, management guided that the project in Kulai, Johor could achieve strong gross profit margins of 40–50%. To diversify earnings and reduce reliance on Perak, the group has expanded into multiple states, including Negeri Sembilan, Johor, and Kedah, positioning itself for broader nationwide coverage. With continued launches ahead and strong demand for low-cost housing, LAGENDA is well-positioned to sustain growth and preserve margins in the coming years. However, given the subdued pace of revenue recognition, we do not anticipate significant earnings increase over the near term. 

 

Earnings Revision. Trimmed our CNP forecast by -9.1%/-4.5% to RM201.1m/RM252.5m in FY25F/FY26F to account for slower-than-expected construction progress in certain newly launched projects and a weaker take-up rate in more mature townships such as Perak.

 

Valuation. Following the earnings adjustment, we reiterate our BUY recommendation with a lower target price of RM1.53 (from RM1.55), based on 30% discount rate to our RNAV valuation and appraised with a three-star ESG rating.

 

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

Read more details in:

Disclaimer

The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.

Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.

Market Mover
Settlement Rates
Currency Buy Rates (RM) Sell Rates (RM)
USD 4.212042 4.248408
EUR 4.921000 4.929487
CNY 0.591903 0.592919
HKD 0.540309 0.544492
SGD 3.268153 3.293573