HUNZA Property

TP for this company

CIMB - 1.93

K&N - 1.76

OSK - 3.08 (Damn..OSK always with high TP)

My Target ~RM2.00. Hope not too optimistic. :p

Healthy balance sheet, low gearing, PE less 6, trading below NTA and BV!

Reminds me of Mahsing few years back.

Btw, I like their Gurney Paragon project, ncely design, would be perfect if they could match ION Orchard....

but looking forward for it.

===================================================

Latest research from CIMB

• Broadly in line; maintain OUTPERFORM. Hunza Properties’ annualised

1QFY6/11 core net profit, which excludes RM22.7m revaluation gains, came in

within consensus estimates but was 6% above our projection. However, we regard it

as being broadly in line with expectations given the relatively volatile nature of

property sales. We are, therefore, keeping our EPS estimates. As expected, no

dividends were declared for the quarter. In the absence of any earnings revision,

our target price stays at RM1.93, still pegged to a 40% discount to its FD RNAV.

The stock remains an OUTPERFORM given the potential catalysts of 1) stronger

property sales, 2) better-than-expected construction progress, and 3) increasing

investor interest in the Penang property market.

• Net profits lifted by revaluation gains. 1QFY11 revenue rose 13% yoy, thanks to

the completion of Infinity and stronger progress billings for Gurney Paragon. But net

profit jumped 173% yoy, boosted by RM22.7m revaluation gains for its Gurney

Paragon mall. Recall that under FRS140, investment properties are to be revalued

at regular intervals of at least once every year. Excluding the revaluation gains, core

net profit was relatively flat as EBITDA margins contracted by about 4.6% pts due to

higher operating costs.

• Slower sales in 1Q. Hunza Prop raked in RM24m worth of sales in 1Q11, 38% less

than 1QFY10’s RM39m and 11% less than 4QFY09’s RM27m (Figure 1). The takeup

rate for Infinity has risen to 92% at end-Sep 10 from 87% as at end-June 10

while Gurney Paragon’s take-up has inched up just 1% pt to 64%. The group’s total

unbilled sales stand at RM82m compared with RM103m at end-June 10.

• Sales to take off when construction of mall gains traction? The take-up rate for

Gurney Paragon is somewhat slow but should pick up in FY12 when buyers are

more confident about the progress of the mall’s construction. The priority now

seems to be the smooth construction and completion of the Gurney Paragon mall by

end-CY12. The group has completed piling works for the mall and is now

constructing the basement.