AmProp’s prospects to remain exciting

Amcorp Properties Bhd (April 11, 89 sen)

Maintain buy with an unchanged target price of RM1.53: We were recently given a tour of Amcorp Properties Bhd’s (AmProp) Tokyo properties. Generally, the properties are located in the upper-end suburbs of Tokyo and largely within a 20- to 30-minute train ride radius of the central business district.

We were taken on a guided tour of the properties, which comprise two residential and a commercial development. All are in mature suburbs of Tokyo with a strong growth angle attached, in view of the ongoing development in their respective neighbourhoods.

Nevertheless, contributions from Tokyo will likely remain small over the near term, overshadowed by AmProp’s London projects, which total nearly RM3 billion in gross development value.

We think, however, that with a good product portfolio, solid partners and strong development potential, prospects should remain exciting.

Given also the encouraging macro backdrop, the outlook is favourable and thus AmProp is a good proxy for the high-end property segment for metropolises, such as London and Tokyo.

In short, AmProp’s Tokyo property portfolio further reinforces our view that management will continue to create value for shareholders.

In the near term, earnings visibility remains solid due to the expected completion and thus recognition of earnings from its London properties in financial year 2017 (FY17) and FY18.

We continue to project a three-year earnings per share compound annual growth rate of 64%.

There is likely to be an upside to our FY16 dividend yield forecast of 4% if the payout ratio matches FY15’s 50%. — Affin Hwang Capital Research, April 11

Do not ask your sister-in-law about the value of your home. Go to The Edge Reference Price to find out.

This article first appeared in The Edge Financial Daily, on April 12, 2016. Subscribe to The Edge Financial Daily here.