UMLand ... Dec10

CIMB Research:-

Results highlights
• Above expectations. UM Land’s results were above expectations as annualised 9M10 net profit came in at 111% of our forecast and 108% of consensus estimates. The deviation came mainly from stronger-than-expected profit recognition for Suasana Bangsar. Factoring in RM15m gains on the sale of the Ipjora land in 4Q, we raise our FY10 EPS by 36% but cut FY11-12 by 9-10% due to the absence of future contributions from the land. We retain our BUY recommendation and RM2.11 target price, which we continue to base on a 50% discount to its RNAV. The share price could be catalysed by 1) robust sales by property developers in general, 2) more land acquisitions and 3) a good response to the launch of two new projects.

• Suasana Bangsar boost. 9M net profit surged 117% yoy to RM25.6m, thanks to better performances by both the township and niche development divisions. 3Q net profit improved to RM12.8m against a RM0.8m loss in the same period in 2009 and RM6.3m profit in 2Q. The Suasana Bangsar condo project was 96% sold and 99% completed as at Oct and will be handed over in Dec. UM Land proposed an interim dividend of 2.5 sen, in line with expectations and the year-ago dividend.

• RM210m sales in 9M10. 3Q10 sales came in at RM70m vs. RM37m in 3Q09 and RM53m in 2Q10. 9M sales surged 119% yoy to RM210m, coming mostly from townships (RM147m), followed by niche developments (RM43m) and land sales (RM20m). YTD, UM Land has launched RM433m worth of properties and has another RM66m to go. It has again scaled back its targeted launch schedule of RM727m as the Puteri Harbour condo has been pushed back to 2011.

• One condo launched, one delayed. The RM274m Suasana Bukit Ceylon condo held a soft launch on 2 Nov. The 310 units were priced at an average of RM700 psf. 78 units or 25% have been booked. The project will be launched officially in 1Q11. As for the RM144m Puteri Harbour condo project in Iskandar Johor, the end-2010 launch has been pushed back to 1Q11. The retail portion of the project will be
presold. UM Land is currently in talks with a potential buyer.