Public Investment Bank has given an ‘outperform’ rating for UEM Land Holdings, despite posting weak results for the first quarter. This is due to the possibility that the developer could become a major player in the billion-dollar Marina South development in Singapore.
On the other hand, other brokers such as HwangDBS-Vickers cut the company’s earnings target for financial year 2012/2013 by up to 15 percent on concerns of an uncertain economic environment as well as the risk of doubling the floor price of residential properties in Malaysia for foreign buyers.
For the quarter ended-January, the developer’s earnings declined 62 percent to RM54.3 million (S$22 million), pulled down by a 47 percent drop in sales to RM290 million (S$117.5 million).
Compared to a particularly strong Q4 period, sales in the first three months of 2012 fell due to less strategic land sales as well as slower construction progress due to fewer working days.
Earnings amounted to just 15 percent of consensus estimates. However, this is expected to inch up in the coming months, given that more launches are scheduled for the second half, said Public Investment. New projects include CS-2, a luxury condo project in Iskandar Malaysia’s Puteri Harbour and a mixed development in Kuala Lumpur City Centre.
“Margins have also improved sequentially, driven by high-end property sales which traditionally command higher margins,” it added.
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