Tambun: RM100mil On Track

Tambun FY14Q2 Financial Result

TAMBUN	FY14Q2	FY14Q1	FY13Q4	FY13Q3	FY13Q2
Revenue	128.0	112.0	118.4	97.1	82.6
PBT	33.1	35.3	36.3	31.2	26.3
PBT%	25.9	31.5	30.7	32.1	31.8
PATAMI	25.4	25.3	22.1	17.2	14.0
Total Equity	351.0	336.0	310.1	273.9	243.1
Total Assets	676.1	596.9	496.9	510.2	475.0
Trade Receivables	106.8	99.1	86.6	83.8	79.8
Prop dev cost	57.2	96.4	125.1	129.6	131.5
Inventories	0.3	0.3	0.3	0.0	0.0
Cash	194.4	142.8	125.9	141.9	117.2
Total Liabilities	323.0	258.7	183.3	185.0	185.9
Trade Payables	102.0	93.1	81.1	74.5	69.7
ST Borrowings	38.3	39.5	24.8	26.4	26.7
LT Borrowings	164.7	116.6	73.3	73.8	80.3
Net Cash Flow	80.6	29.0	24.3	52.5	22.9
Operation	-23.1	-23.0	57.9	32.5	2.0
Investment	2.4	4.1	-21.4	-4.5	-4.2
Financing	101.3	47.9	-12.2	24.5	25.0
EPS	6.34	6.41	6.14	5.22	4.46
NAS	0.86	0.85	0.79	0.82	0.76
D/E Ratio	0.02	0.04	Net cash	Net cash	Net cash

For Tambun's FY14Q2's result, earlier I've mentioned that anything better than FY14Q1 could be a bonus, as I don't expect that it will keep on breaking its record. It finally turns out to be a small bonus.

Compared to preceding quarter, latest revenue increases 14.3% but PBT drops 6.2% while PATAMI rises RM0.1mil. The reason given for lower PBT is "due to provision of RM29.6mil made for supplemental development costs on low cost housing projects as required by the Authorities". I don't quite understand what it means and hope that someone can help to explain.

Anyway, if compared YoY, both revenue and PATAMI jump 55% and 81% respectively. Total PATAMI for the first half of FY14 stands at RM50.7mil.

Sales achieved for 1HFY14 is at RM274mil, which is 55% of management's whole year target of RM500mil.

As a result, unbilled sales increase to RM493mil from RM467mil 3 months ago, with a total on-going GDV of RM1.2bil. Average take-up rate remains good at 81.2%.

After recent acquisition of 209.5 acres freehold land adjacent to its Pearl City for RM150mil (RM16.50 psf), Tambun can add another RM1-1.3bil GDV to its portfolio, pushing its overall GDV to reach approximately RM4.4bil. 

Total bank borrowings increase due to purchase of land but net debt/equity ratio drops slightly to only 2%. Operational cash flow remains negative so far in FY14, I guess it's mainly due to significant drop in property development cost. I'm not too sure what's going on but it should not be too much concern as overall unbilled sales go up this year.

The 4.6sen final single tier dividend has finally been announced and will ex on 2nd Sep. So total dividend for FY13 is 6.6sen which represents slightly over 40% payout ratio. The dividend yield is 2.75% at share price of RM2.40.

If Tambun can achieve RM100mil PATAMI for its FY14, then it could pay at least 10sen dividend (RM40mil) which is still a good 4.2% yield at RM2.40.

As the financial result remains on track, I'll keep my own target price for Tambun at RM2.53.

       Carissa Villas @ Butterworth

In October last year while Ecoworld made an entry into Simpang Ampat area, I wrote "we will likely witness a double storey terrace house of more than RM500k soon in Simpang Ampat area." At that time, a DST house at Pearl City was sold at about RM300-400k.

In May this year, Asas Dunia launched Hijauan Valdor about 2km further south of Simpang Ampat at Sungai Bakap. The price for DST already started from RM550k. If Ecoworld launches its project here next year, could it be at least RM600k for a DST? It doesn't look impossible, does it?

If this is true, Tambun Indah will definitely benefit from it as its Pearl City land was acquired years ago at a cost of about RM11 psf, while the newly acquired land is only at RM16.50 psf. Ecoworld & GUH got their land here at RM40 psf & RM35 psf respectively.

Besides, we might also see non-low-cost high-rise residential projects in Pearl City sooner than expected, especially if its commercial component turns out to be successful.

If the DST is sold at RM500k, a 1,300 sq ft apartment could be sold at RM260k (RM200 psf) which is fairly "affordable". Tambun Indah could get higher GDV for this. However, I think this is unlikely in the next 2 years.

As long as the future of southern Seberang Perai is bright, I will continue to hold Tambun.