KLCI : 1,720.37
Price Target : 12-month RM1.40 (prev. RM1.60)
Sentul to the fore
Results above expectations, Capers bearing fruit
Strong take-up for Fennel; prime beneficiary of MRT
Maintain Buy, tweak SOP-based TP to RM1.40
Above expectations. 4QFY13 net profit came in at RM18m, bringing full-year earnings to RM26m (89% higher than our forecast due to faster than expected construction for Capers@Sentul East). Capers super-structure is already up which should see further acceleration in earnings recognition to help cushion the void left by completion of Sentosa Cove@Singapore villas.
Strong take-up for Fennel. The first 2 blocks (out of 4) launched in Jul were almost sold in just 1 weekend following overwhelming response from both repeat and new customers. Fennel’s selling points include: a) Sentul’s strategic location just 8km from KLCC with good connectivity (potential MRT interchange in future with 2-3 stops, along with existing LRT and KTM stations); b) Attractive pricing of RM650-700psf for freehold & iconic design (comparable to secondary market prices for older Sentul projects & cheaper than new launches in the suburbs at RM750-1000psf); c) DIBS for 54 months (YTLL to absorb interest during construction); and d) YTL’s strong track record. Fennel should help underpin YTLL’s earnings up to early 2018. Capers slated for completion by end-2014.
Potential catalysts: a) Cabinet approval for MRT2 line expected in July (Sentul has been identified as a key transportation hub for North KL); b) Launch of remaining 2 blocks of Fennel (likely by year-end at RM700-750psf), Shorefront Residences condos in Penang (ASP: RM1000-1200psf), and U-Thant condos next to Micasa Hotel (ASP: RM1200psf). Shorefront should do well given its prime location next to E&O Hotel and change in layout to the more popular smaller units. As for Midfields (YTL Land is the project manager with 10% share of revenue), there are still 5 blocks of condos to be launched in 3 phases (secondary market transacting at RM450psf).
Maintain Buy, but tweak TP to RM1.40 (from RM1.60) based on a wider 40% discount (from 30%) to RNAV of RM2.32 to take into account higher risk premium with heightened economic uncertainties. We continue to like YTLL : a) Biggest beneficiary of MRT interchanges; b) Flagship Sentul is among the last remaining large contiguous undeveloped parcels near KL CBD; and c) Strong track record & following. We raise FY14-15F earnings by 17-38% to factor in faster construction progress for Capers and stronger takeup for Fennel.
Publish date: 23/08/13