Lagenda Properties Bhd - Missed Expectations
Fri, 28-Nov-2025 12:38 am
by Research Team • Apex Research

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LAGENDA (7179)

Target Price (RM)

1.490

Recommendation

Buy

  • LAGENDA’s 3QFY25 CNP came in at RM42.9m (-9.3% YoY, -5.4% QoQ), bringing 9MFY25 CNP to RM130.9m (-3.7% YoY), which accounts for 65.1% of our full-year forecast and 67.7% of consensus estimates. The results were below expectations due to several projects still being in early stages with limited earnings recognition.

  • Outlook remains constructive, supported by: (i) RM543m new sales in 3QFY25 (YTD: RM1.2bn), (ii) strong earnings visibility from RM1.3bn unbilled sales and RM543m outstanding bookings, (iii) progressive multi-state expansion, and (iv) supportive policy backdrop for affordable housing and sustained demand for landed township developments.

  • We maintain our BUY call with a lower TP of RM1.49 (from RM1.53), based on a 30% discount to our revised RNAV.

 

Results below expectations. Excluding fair value gain on investments (-RM1.1m) and other items (-RM0.6m), 3QFY25 CNP stood at RM42.9m (-9.3% YoY, -5.4% QoQ), bringing 9MFY25 CNP to RM130.9m (-5.4% YoY). This accounted for 65.1% of our full-year forecast and 67.7% of consensus, missing expectations due to several projects still being in early stages with limited earnings recognition.

 

YoY. CNP fell 9.3%, weighed down by weaker Property Development, Trading and higher tax expenses. Property Development’s PBT declined 5.7% on a higher mix of affordable housing launches (Ardea 2, La’ Indera 1A, Darulaman 3B, La’ Lumiére 1A/2A) and reduced contributions from projects nearing completion with stronger margins (Lagenda Suria 1B, Puncak Warisan, Lagenda Ardea 1A, Lagenda Aman). Trading segment’s PBT plunged 90.4% on a 49.2% drop in revenue and unfavourable product mix, resulting in a 5.5%-pts margin contraction. Effective tax rate rose to 27.6% (3QFY24: 25.6%), likely due to certain non-deductible expenses.

 

QoQ. CNP declined 5.4% despite a 6.7% rise in revenue, dragged by softer contributions from Property Development division (PBT -2.2%) from greater affordable housing mix and Trading division (-9.1%) from lower sales, alongside a higher tax expense.

 

YTD. CNP eased 5.4%, reflecting softer Property Development (PBT -4.1%) and Trading (-56.3%) contributions. Property Development’s margins contracted 1.4%-pts despite stronger revenue (+6.8%), pressured by affordable housing commitments and one-off cost adjustments on completed projects. Trading segment remained weak due to lower external contractor demand and unfavourable mix.

 

Outlook. The Group achieved its highest quarterly property sales of RM542.9m in 3QFY25, lifting YTD sales to RM1.2bn. Unbilled sales increased to RM1.33bn (from RM1.1bn), providing visibility for the next three years. This, together with RM543m in outstanding bookings, anchors a robust earnings pipeline, led by La Lumiere (Kulai) and La Indera (Kuantan). With successful multi-state expansion and policy support for affordable housing, the Group remains well-positioned to capture sustained demand for landed township developments.

 

Earnings Revision. We revise our property development revenue recognition by adopting more conservative assumptions on construction progress, resulting in a larger spillover into FY26. We also trim margin assumptions to reflect a higher proportion of affordable housing projects. Consequently, FY25F/FY26F earnings are revised by -12%/+4%, while FY27F remains unchanged.

 

Valuation. We maintain our BUY call with a lower TP of RM1.49 (from RM1.53), based on a 30% discount to our revised RNAV and a three-star ESG rating.

 

Risks. Rising construction costs, changes in housing policies or property regulations, and slower-than-expected sales absorption of new developments.

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