KLCI : 1,794.65
Price Target : 12-month RM1.40
Continual strong demand for Sentul
• Results in line, Capers construction on track
• Continual strong take-up for Fennel; approval of MRT 2 & 3 lines could be re-rating catalysts
• Maintain Buy and RM1.40 TP
Within expectations. 1QFY14 net profit came in at RM3.3m (+63% y-o-y, -82% q-o-q), constituting 13% of our full-year estimate. Growth y-o-y was driven by contribution from Capers@Sentul East condos and sale of completed units of Sentosa Cove@Singapore villas. We expect earnings to pick up in future quarters for the fully sold Capers as progress billings have reached 70% - on track for completion by end-2014 (we do not discount the possibility of early delivery to save on interest payable as the project offers Developers- Interest-Bearing-Scheme, DIBS).
Continual strong demand at Sentul. Block B (third block) was launched recently at RM700-850psf (vs RM650-700psf earlier), with 80% take-up over a weekend. Demand remains resilient despite increased restrictions imposed in Budget 2014 (e.g. higher RPGT of 15-30% for disposal within 5 years vs 10-15% previously, doubling of minimum purchase price for foreigners) and stricter bank lending. Fennel’s selling points include: a) Proximity to KLCC ( < 10km) with good connectivity (potential 2 MRT stops + existing LRT & KTM stations); b) Reasonable pricing for freehold & iconic design; c) 4.5 years-DIBS (RPGT falls to 0-5% for disposal after 5 years; DIBS approval obtained for entire project in July); and d) YTL’s strong brandname. Fennel should help underpin YTLL’s earnings up to early 2018 (unbilled sales to date ~RM600m, assuming Block B bookings are converted to sales).
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 block at Fennel, Midfields@Sungai Besi condos (RM500psf), Shorefront Residences condos in Penang (RM1000-1200psf), and U-Thant condos next to Micasa Hotel (RM1200psf). Shorefront should do well given its prime location next to E&O Hotel and low density.
Maintain Buy and TP of RM1.40, based on 40% discount to RNAV of RM2.32. We continue to like YTLL: a) Biggest beneficiary of MRT interchanges (government has classified MRT as a high priority high impact project); b) Flagship Sentul is among the last remaining large contiguous undeveloped parcels near KL CBD; and c) Strong execution track record & following.
Publish date: 22/11/13