News by Kenanga Research

The listing of EWI has been slightly delayed to September or October 2016 due to a “new strategic investor”, while management is unfazed by Brexit.

The property segment could see an improvement on the back of asset disposals.

At its briefing, Hua Yang Bhd’s management highlighted that financial year ended March 31, 2016 (FY16) sales were slower than expected owing to the poor property market sentiment as homebuyers adopted a wait-and-see stance coupled with high loan rejection rates, which prompted the company to delay some initial planned launches to focus on clearing inventories worth a gross development value (GDV) of RM370.7 million from previously launched projects.

The weaker-than-expected sales were predominantly due to a prolonged challenging environment in the property market stemming from high-loan rejection rates, especially in the affordable housing category, and delay in launches.

Last Thursday, Mass Rapid Transit Corp Sdn Bhd (MRT Corp) announced that it had awarded two viaduct packages, V210 and V203, with Malaysian Resources Corp Bhd (MRCB) bagging V210 worth RM648 million. V210 consists of a 2.6km viaduct guideway and other associated works from Persiaran Apec in Cyberjaya to Putrajaya Sentral, part of the four work package contracts awarded for the construction of the mass rapid transit (MRT) Sungai Buloh-Serdang-Putrajaya line (MRT2), with a combined value of RM4.2 billion. We gather that MRCB has not received any official letter from MRT Corp, which explains the absence of an announcement to Bursa Malaysia on the job award.

It will benefit developers in the Selangor area as they already have the right type of land bank and obtained approvals for such projects.

The core net profit growth of 10% was underpinned by steady revenue growth of 4%. The growth in revenue was mainly attributable to the steady progressive billings of its ongoing projects and completion of selected phases of Taman Pulai Indah and Taman Pulai Hijauan, Bandar Universiti Seri Iskandar as well as FLEXIS @ One South.

Last Thursday, IJM Corp Bhd announced that it had bagged a contract from UEM Land Bhd for main building works — Phases 1A and 1B — for the proposed mixed-use development known as Almãs in Puteri Harbour, Johor, worth RM484.2 million.

We are not surprised with Hua Yang’s land acquisition down south as management highlighted that it had been actively looking for landbanking opportunities in several locations, ie central, north and south.

However, this is after we cut our earnings forecast by 68% in the second quarter of 2016 due to slower-than-expected billing progress from its property development and construction division, and weak sales.