Tambun Indah Land Sustaining Momentum in Trying Times
Tambun launched Mutiara Indah this quarter with a GDV of RM20.8 million and a take-up rate of 30.8%, contributing RM6.4 million in sales.
Tambun Indah Land (TIL) has recently released its Q4 4Q22 results, showing a decline in net profit by 31.0% quarter-over-quarter (QoQ) and 58.3% year-over-year (YoY), totaling RM11.8 million.
Revenue for the quarter was RM53.9 million, also declining by 17.8% QoQ and 49.9% YoY due to lower sales of new properties. Despite the negative results, the full-year figures were slightly below expectations, with a deviation of -11.1% in revenue and -0.7% in net profit.
Despite the decline in revenue, TIL's margins have improved YoY. The Group's FY22 operating profit margin increased to 38.0%, up from 33.1% the previous year, due to reduced costs of sales. Other margins such as pre-tax profit and profit after tax also improved at 36.4% and 26.9% respectively, suggesting a decline in material costs and supply chain disruptions.
The Group's unbilled sales dipped to RM77.1 million in 4Q22, a decline from RM90.1 million in the previous quarter. Despite this, the full-year new property sales for 2022 reached RM173.2 million, and TIL's unbilled sales are expected to maintain its earnings visibility for the next 2-3 years with moderate growth. The Group has seven ongoing projects with a total Gross Development Value (GDV) of RM659.2 million.
Launch of Mutiara Indah
Tambun launched Mutiara Indah this quarter with a GDV of RM20.8 million and a take-up rate of 30.8%, contributing RM6.4 million in sales. The Group has only one planned project for 2023, Dahlia Garden, a landed residential development with a GDV of RM107 million.
TIL remains focused on strategic landbanking and improving its recurring income stream. With a net cash status, TIL continues to seek landbanking opportunities and promote Pearl City Business Park. Our 2023F and 2024F net earnings estimates have been increased by 4.8% and 5.6% to RM67.9 million and RM71.3 million respectively, adjusted for moderate sales growth and pre-COVID level margins.
Due to the gloomy outlook of the sector, driven by interest rate hikes and higher cost of living, we have downgraded TIL's recommendation to HOLD with a target price of RM0.88, lower than its previous target of RM0.98. The target price is based on a PE multiple of 5.7x to the 2023F earnings per share, compared to its 5-year mean PE of 6.3x.