Sunday, September 1, 2013

Hunza Properties : Dividend Galore! (Kenanga)

Hunza Properties
Price: RM2.01
Target Price: RM2.09
Dividend Galore!

Actual vs. Expectations
FY13 core earnings of RM19.8m met market expectations but exceeded ours as it was ahead of both consensus and our estimates by 3% and 12%, respectively.

Declared special interim share dividend based on 25 treasury shares for 1000 existing shares. Based on the last traded share price, this translates to 5.03 sen/share. On top of that, the group is also proposing a final single-tier dividend of 5.60 sen. Hence, implied entitlements for FY13 are 10.63 sen (5.2% yield).

This is a pleasant surprise and the rationale of the special share dividends is to commemorate the transformation of Hunza from a developer into a real-estate landlord following the completion of Gurney Paragon Mall (“GPM”).

Key Results
YoY, FY13 core earnings fell by 47% largely due to lack of new launches over the last 2 years while sales of its completed properties (e.g. GP Condo and Infinity) are also at their tail-ends. EBIT margin was compressed by 2.0ppt to 30.2% due to start-up costs from GPM and recognition of more BPB projects (lower margins vs. GP Condo and Infinity).

QoQ, 4Q13 net profit rose to RM152.8m due to RM146.1m fair value gains arising from GP Condo, which commenced its soft launch in Jul-13. Excluding that, core earnings rose by 339% to
RM6.7m on the back of EBIT margins improvements by 16.3ppt to 35.3% due to higher billings and sales of inventories.

The group will be launching a new phase in BPB with GDV of RM60m. They also intend to kick-off their Juru land project (integrated project) with an initial phase of RM700m GDV comprising service apartments; but we will only build this into our estimates/valuations when we have more details, i.e. timeline and stage of planning. GPM is now 85% tenanted and is expected to hit 95% tenancy by year end.

Change to Forecasts
Increasing FY14E core earnings by 20% to RM20.6m given the new BPB launch and commencement of income stream from GPM. Although we still expect development earnings to decline YoY, it appears that the stronger-thanexpected occupancy and rental rates of GPM could more than negate the former. Unbilled sales of RM7m provide <6 earnings="" months="" p="" visibility.="">

No changes to TP to RM2.09 based on 35% discount to FD RNAV of RM3.20.

Sector risks, including negative policies.

Source/Extract/Excerpts/来源/转贴/摘录: Kenanga-Research,
Publish date: 28/08/13

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Tan Teng Boo

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