KUALA LUMPUR (Nov 22): Phillip Capital has maintained its "buy" rating on Lagenda Properties Bhd at RM1.20, with a lower revalued net asset value-derived target price of RM1.51 (from RM1.55 previously).
In a note on Tuesday, the research house said Lagenda Properties Bhd is set to exhibit moderate earnings rebound of around 40% year-on-year (y-o-y) in financial year 2024 forecast (FY2024f) on the back of its record-high unbilled sales and ongoing expansion in Johor and Kedah.
Phillip Capital anticipates the group’s development in Mersing, Johor, which has an estimated gross development value of RM985 million, will enhance the property developer's financial result for the following quarter in 4Q2023.
In tandem with the group's current higher confirmed sales of RM289 million, Phillip Capital expects Lagenda's unbilled sales to climb and reach a record high of RM855.1 million, which will provide revenue visibility until 2025.
In a separate research note on Wednesday, Phillip Capital said Lagenda was currently trading at a compelling five times the estimated earnings per share (EPS) for 2024, compared to the industry average of eight to 12 times, despite results for the third quarter ended Sept 30, 2023 (3QFY2023) coming in below expectations.
The group’s 5.85% dividend yield offer is said to be attractive.
The research house lowered its 2023 to 2025 earnings forecasts for the group by 12% to 24% on the back of slower-than-expected construction progress for affected townships.
Earlier, Lagenda posted a core net profit for the first nine months of 2023 (9MFY2023) of RM106.3 million, down 15.3% y-o-y, which missed both the research house's and consensus estimates.
According to Phillip Capital, the weak performance was mainly due to the slower construction progress of its township projects in Teluk Intan and Kedah, affected by the transition to the Industrialised Building Systems.
At the time of writing, Lagenda shares were traded down two sen or 1.67% to RM1.18, valuing the company at RM988.05 million.