The Group’s outlook remains positive, supported by its strong unbilled sales of RM1.72bn, which is expected to provide revenue visibility through FY29 as construction advances.
The Group's diversification beyond residential development is gaining shape: the Andaman Island hospital JV and the new KLCC/Pavilion KL luxury serviced-apartment redevelopment both extend the earnings base without displacing the core Property engine.
We raised our FY27F/FY28F/FY29F core net profit forecasts by +24.1%/+24.8%/+12.7%, to RM338.1m/RM393.5m/RM578.7m.
Maintain BUY with an increased TP of RM0.97 (from RM0.96), based on a 55% discount to our RNAV.
Segmental Performance. The Property segment recorded both higher revenue and operating profit in 1QFY27, continuing to anchor Group earnings. The increase in revenue was mainly attributable to stronger revenue recognition and sales performance from existing developments, consistent with the Group's steady construction progress across its ongoing project pipeline. The Hospitality segment saw revenue decline modestly in the quarter, with occupancy levels at E&O Residences weighing on the topline. The Investments & Others segment recorded a RM1.8m decline in operating profit, driven mainly by a decrease in management fees charged. This is broadly consistent with the pattern seen through FY26 and 1QFY27, where fee income from this segment has been tapering as projects progress further along their completion curves and management-fee-generating activity normalises.
Sales and Unbilled Sales. E&O registered new sales of RM356m for 1QFY27, with Penang-based projects contributing the bulk of sales at 72%, and the remaining 28% from Klang Valley developments. This continues to underscore Penang as the Group's primary sales engine. Combined with steady billing progress on ongoing projects, unbilled sales rose to RM1.72bn as at 1QFY27 – providing revenue visibility through FY29 as construction advances, and broadly in line with the trajectory flagged in the Group's prior quarter commentary.
New Launch – AVÉA Phase 2. During the quarter, the Group launched AVÉA Phase 2, which has received a positive reception from the market since its debut. The launch adds to the Group's sales pipeline and should support further unbilled sales growth in coming quarters, building on the momentum already seen from the original AVÉA launch.
Andaman Island Hospital JV. E&O also established a joint venture during 1QFY27 to develop and operate a private hospital on Andaman Island. We view this as a sensible diversification move – extending the Group's earnings base beyond residential development and reinforcing the broader live-work-play ecosystem the Group is building out on the island, in support of its longer-term masterplan for the estimated 25,000 future residents.
Outlook. Looking ahead, the Group's near-term development pipeline includes Senna & Fera Phase 5 and Plot 16A-1, which should provide further impetus to sales momentum and help sustain unbilled sales growth over the medium term. Together with the ongoing Andaman Island masterplan and the ramp-up of the new hospital JV, we view the pipeline as supportive of continued earnings visibility well beyond FY29. On balance, this update reinforces the picture from the 1QFY27 results: Property remains the clear growth engine, Hospitality softness looks seasonal/occupancy-driven rather than structural, and the modest fee-income decline in Investments & Others is a natural consequence of projects maturing rather than a concern in its own right. The RM356m new sales figure and RM1.72bn unbilled sales base give reasonable confidence in near-to-medium-term earnings visibility, while the Andaman Island hospital JV and the Senna & Fera Phase 5/Plot 16A-1 pipeline extend that visibility further out.
Earnings Revision. We take this opportunity to revise our core net profit forecasts upward, premised on the Group's healthy unbilled sales base of approximately RM1.72bn and robust new sales of RM356m recorded in 1QFY27 alone, both of which underpin stronger medium-term earnings visibility as percentage-of-completion recognition catches up with the Group's expanded launch pipeline. Consequently, we raise our FY27F/FY28F/FY29F core net profit forecasts by +24.1%/+24.8%/+12.7% to RM338.1m/RM393.5m/RM578.7m respectively. We also factor in the positive market reception to AVÉA Phase 2 since its 1QFY27 launch, alongside the upcoming Senna & Fera Phase 5 and Plot 16A-1 launches, which should sustain sales momentum and extend the Group's earnings visibility beyond FY29.
Valuation. We maintain our BUY call with an increased TP of RM0.97 (from RM0.96), based on a revised RNAV model, supported by a three-star rating ESG rating.
Risk. Affordability concerns amid premium positioning, SST exposure on construction services, and Syariah-compliant status risk.
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| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.010089 | 4.038209 |
| EUR | 4.662104 | 4.666874 |
| CNY | 0.598052 | 0.598669 |
| HKD | 0.511478 | 0.515075 |
| SGD | 3.148983 | 3.171274 |