SkyWorld Development Bhd - Earnings Temporarily Soft
Mon, 24-Nov-2025 07:06 am
by Research Team • Apex Research

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SKYWLD (5315)

Target Price (RM)

0.51

Recommendation

Hold

  • SKYWLD’s 2QFY26 CNP came in at RM7.0m (-34.3% YoY, +86.4% QoQ). The results were below expectations, accounting for only 21.0% of our full-year forecast and 20.9% of consensus estimate. The earnings miss was primarily driven by slower-than-expected construction progress of ongoing projects, while newly launched projects have yet to meaningfully contribute.

  • The Group declared a first interim dividend of 0.22 sen per share (ex-date: 2 Jan 2026), down from 0.5 sen in 2QFY25.

  • We have trimmed FY26F earnings by 3.5% to RM49.7m, while modestly raising FY27F/FY28F by 1.0%/2.0% to RM62.6m/RM89.6m, reflecting slower near-term revenue from ongoing project construction and stronger progress in subsequent years.

  • Maintain HOLD recommendation with a lower target price of RM0.51 (from RM0.52), based on a 50% discount to our revised RNAV valuation and appraised with a three-star ESG rating.

 

Results below expectations. Excluding exceptional items such as gain on fair value adjustment on short-term funds (-RM1.3m) and unrealised foreign exchange loss (+RM0.4m), 2QFY26 core net profit (CNP) came in at RM7.0m. The result was weaker-than-expected, accounting for 21.0% of our forecast of RM51.5m and 20.9% of consensus estimate of RM51.8m. The earnings miss was primarily driven by lower-than-expected revenue recognition from ongoing projects due to slower construction progress from Vesta Residences, coupled with the lack of mature projects in the pipeline as most projects have only recently been launched. 

 

YoY/YTD. CNP fell 34.3% YoY/47.7% YTD on the back of a 30.3% YoY/27.7% YTD decline in revenue. The weaker top line was due to the absence of contributions from completed projects (EdgeWood Residences and SkyVogue Residences) recorded in 2QFY25, while ongoing projects were insufficient to replicate the prior year’s high base. 

 

QoQ. CNP rose 86.4% QoQ, on the back of a 16.2% QoQ increase in revenue, driven by higher progressive billings from the ongoing Vesta Residences project and contributions from the newly launched SkyAman 1 Residences.

 

Dividend. The Group declared a first interim dividend of 0.22 sen per share (ex-date: 2 Jan 2026), down from 0.5 sen in 2QFY25.

 

Outlook. Earnings momentum is set to improve as Vesta Residences’ construction progresses to the main residential floors, enabling faster construction, while Curvo Residences (70% take-up as at Sept 2025) remains on track for 4QFY26 completion and its 90% sales target. Unbilled sales rose 21.9% QoQ to RM589m (from RM483m), supported by the newly launched SkyAman 1, and are expected to be recognised over 12–18 months. With cumulative GDV of RM843.5m from SkyAman 1, SkyAwani PRIMA, and SkyAwani 6, the Group is on track to meet its RM2.0bn FY26 launch target. However, meaningful earnings contributions are expected from FY28 onwards, anchored by the RM12.0bn affordable housing project in Penang (construction from CY27) while near-term earnings uplift from new launches should remain gradual.

 

Earnings Revision. After factoring in slower-than-expected revenue recognition from ongoing projects, we trim FY26F earnings by 3.5% to RM49.7m, while modestly raising FY27F/FY28F by 1.0%/2.0% to RM62.6m/RM89.6m, reflecting stronger project progress in the coming years.

 

Valuation. Following the earnings revisions, we maintain HOLD on SKYWLD with a lower target price of RM0.51 (from RM0.52), based on a 50% discount to our revised RNAV valuation, and appraised with a three-star ESG rating.

 

Risks. Potential increases in construction costs, intense competition in the mid-range residential segment and regulatory changes. 

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