Monday, 23 November 2015

Tambun: Affected By APDL Delay

Tambun Indah FY15Q3 Financial Result

TAMBUN (RM mil) FY15Q3 FY15Q2 FY15Q1 FY14Q4 FY14Q3
Revenue 86.2 60.0 130.4 110.1 116.8
Gross Profit 38.0 28.0 47.6 38.8 43.8
Gross% 44.1 46.7 36.5 35.2 37.5
PBT 32.9 22.2 41.3 35.1 34.8
PBT% 38.2 37.0 31.7 31.9 29.8
PATAMI 23.8 17.1 29.9 25.9 25.5

Property Rev 85.4 59.6 129.5

Property OP 31.6 21.6 40.6

Investment Rev 0.5 0.2 0.2

Investment OP 0.9 2.6 2.4

Total Equity 428.8 417.1 427.5 397.0 377.9
Total Assets 704.9 733.7 667.5 661.8 636.8
Trade Receivables 117.9 125.0 146.0 118.0 117.0
Prop dev cost 94.5 67.6 59.5 72.5 83.9
Inventories 2.2 2.2 2.2 2.4 0.3
Cash 118.4 143.4 116.0 131.5 151.1

Total Liabilities 273.3 314.0 237.1 262.4 256.6
Trade Payables 82.5 104.2 95.9 103.9 93.1
ST Borrowings 31.4 39.2 30.9 35.2 13.8
LT Borrowings 153.2 165.0 119.1 117.7 133.2

Net Cash Flow -13.0 12.0 -12.3 17.7 37.3
Operation 27.6 3.6 28.8 -5.5 3.0
Investment -28.9 -28.3 -11.6 -12.8 8.5
Financing -11.7 36.7 -29.6 36.0 25.8

Dividend paid 41.0 12.6 12.6 26.8 26.8

EPS 5.61 4.05 7.10 6.24 6.22
NAS 1.01 0.99 1.01 0.94 0.92
D/E Ratio 0.15 0.15 0.08 0.05 Net cash

Even though Tambun's FY15Q3 result has improved compared to preceding quarter of FY15Q2, its revenue and PATAMI actually drop 26% and 6.7% compared YoY.

In FY15Q3, it only registered RM21.8mil new sales, compared to RM25.1mil in Q2 & RM146.3mil in Q1.

Up to 9M15, it only achieved RM193mil new sales, which is less than half of its target of RM400mil in FY15.

To recap, Tambun manage to achieve RM429mil and RM500mil new sales in FY14 & FY13 respectively. 

Latest unbilled sales drop further to RM343.2mil from RM408.1mil a quarter ago.

Is Tambun's sales really that bad?

I think those who have visited its sales office or recently bought its properties might not think so.

It is not a secret that many property developers in Penang are facing a delay in getting Advertising Permit & Developers License (APDL) from the federal government.

The approval process which normally takes 2 weeks is now delayed to many many months with no clear reasons (though many should roughly know the reason).

Up until end of Q3 (Sep15), I think Tambun still could not get the APDL for its upcoming projects such as Avenue Garden (GDV RM92.8mil), Raintree Park 2 (GDV RM217.7mil) & Pearl Tropika (GDV RM138.4mil).

That's why it can only recognized RM21.8mil new sales from its existing projects.

I understand that Tambun has already obtained the APDL now and we should see vast improvement in its new sales in FY16, if not in FY15Q4, depends on when the S&P agreement are signed.

Judging from the interest or "registration" for its upcoming projects, Tambun should be able to meet its target RM400mil new sales in FY15 if no delay in APDL.

There is a high demand for properties in Pearl City in which its latest officially launched project Raintree Park 1 which consists of 310 units properties are almost 100% sold out.

The average take up rate for its on-going projects is an encouraging 91%.

Because of this delay in new project launch, Tambun might not be able to produce "consistent" quarterly results in the near future.

Its upcoming quarterly results might be "patchy".

Tambun has started to collect rental from GEMS International School in Pearl City, which is estimated to be RM3.5mil a year according to analyst.

Pearl City Mall which is scheduled to be operational in the first half of 2016 will also contribute to Tambun's rental income later.

Unlike GEMS, Tambun is indirectly involved in the operation of the mall via a 50/50 joint venture.

Besides, there might be another future rental/operation income in medical center in Pearl City.

Tambun's borrowings have increased due to the addition of investment property to the group.

Asiapac registered a massive fair value gain in investment properties after its Imago Mall was completed. Will Tambun do the same for its Pearl City Mall?

Anyway, Tambun has revised its dividend policy to exclude the valuation gain/loss from its investment properties.

A first interim dividend of 3 sen for FY15 has been announced, which is similar to last year.

I'm confident that Tambun should be able to pay at least 9sen dividend for FY15, which means a yield of 6.4% at share price of RM1.40.

Its FY15 EPS should be able to exceed 20sen and this will give it a relatively low PE ratio.

I think all these should provide a good support for its share price.

If the sales recognition of the delayed projects are all recognized in 2016, then I guess year 2016 should be an impressive year for Tambun, as long as there is no more delay in APDL approval.

Tambun is the "pioneer" and also "longest serving" stock in my portfolio started since mid-2013. It is also the one and only stock which has ever occupied my core portfolio.

Of course I have pared down my shareholding in Tambun gradually since 2014.

As I wish to limit my portfolio to maximum 15 stocks, I did think of selling all Tambun shares to free up some space, because share price of property stocks are not expected to do very well in the next one or two years.

Once, I thought of this seriously on bed before I slept and decided to sell all Tambun's shares the next morning. However, in the next morning, I changed my mind and decided not to sell.

I'm not asking readers to buy or not to sell shares of Tambun. My position is different as my remaining Tambun shares are already "free shares" and I plan to stay with it for a special reason.


  1. Hi BD,

    Thanks for the detailed analysis on Tambun. What do you think about Genetec ?


    1. It's obvious that Genetec is a growing company for the past few years. If we take 1H15 financial result, revenue increase by 59% & gross profit by 110%! PATAMI increase even more and if we simply annualize 1H figure we can get RM15mil a year, which means projected EPS of 4.3sen. Now its share is only at 28sen!

      It's noteworthy that its other operating income in 1H15 (RM9.6mil) increase substantially compared to 1H14 (RM1.7mil), while its PBT in 1H15 is just RM9.7mil. I'm not sure what makes up this other income may be from forex gain or some rental income. However, there is also RM5.9mil derivative loss in this period. If we ignore those items, I think core PATAMI could still be around RM6mil for 1H15. If MYR gets stronger, it may have derivative gain in the 2nd half of FY16.

      The little concern is, besides heavily related to HDD which some people are pessimistic, its order to date for FY16 (end Mac16) is only 30% of FY15. Anyway, I think its FY16 result should be great and worth investing for short/mid term.

  2. Thanks BD for the detailed analysis but I don't dare to invest even for short/mid term as the directors are disposing their shares.