Most property stocks in Bursa Malaysia reversed their uptrend since Oct14.
Property stocks have been falling for one and half years now and I still do not see any encouraging signs of recovery.
Property stocks have been falling for one and half years now and I still do not see any encouraging signs of recovery.
Many property developers delay their new launches and registered poorer sales in 2015.
However, there are some who manage to take advantage of lower supply in the market to rake in more sales in 2015.
These companies are mostly those who serve a niche market with their exceptional branding or strategic location.
As I have less time for blogging, I will briefly review the quarterly financial results of those property stocks I have.
Currently I have 2 property stocks in my portfolio (excluding Scientex) after selling all Huayang shares in Jan16.
HUAYANG
Huayang's FY16Q3's financial result is good as expected.
It posted a PATAMI of RM30.2mil, with cumulative 9-month PATAMI of RM88.7mil which is 10% higher than FY15's corresponding period.
When I bought Huayang's shares in Sep14, even though I was aware of property market slowdown, I predicted that Huayang can post strong financial results for at least FY15 & FY16, and give at least 13sen dividend for 2 years.
This is actually not too hard to predict base on its previous new sales trend and unbilled sales.
If new sales manage to beat market expectation in FY15 & FY16, then the results could be even better.
Now we are at the end of Huayang's FY16 (which ends on Mac16), financial results and dividends are good as expected but there is no surprise in new sales.
EPS average about 11sen a quarter and what should be its fair value base on PE ratio?
Anyway, I failed to predict the PE ratio market would like give it.
This shows that PE ratio is nothing if market sentiment is poor in the sector.
New sales so far after 9MFY16 stands at RM255mil, which is unlikely to reach RM400mil in the whole year of FY16. Huayang achieves new sales of RM460mil for FY15.
So unbilled sales drop from RM733mil a year ago to RM530mil now.
It's not hard to predict that Huayang's FY17 will be poorer.
I have sold all my shares in Huayang at a loss of 13.3%. However, it does not mean that I don't like Huayang or it is a poor company. It's just part of portfolio management.
For FY16, Huayang should be able to give the same 13sen dividends like previous FY. This is a good 7.1% yield at current share price of RM1.82.
TAMBUN
Tambun posted a good FY15Q4 result but a fair value gain on investment property of RM6.67mil was included in the PBT.
Even though revenue drops 20% for FY15 compared to FY14, PATAMI manage to stay about the same at slightly more than RM100mil..
Just like Huayang, Tambun's new sales drop from RM429mil in FY14 to RM263mil in FY15. Unbilled sales drop from RM427mil to RM324mil in the same period of time.
However, I think this does not reflect the true sales status of Tambun as it was affected negatively by delay in development approval.
New project Raintree Park 2 contributed RM55mil new sales in Dec15, while Avenue Garden is still yet to be counted in.
I think these 2 projects (combined GDV RM300mil) should be able to give at least RM200mil of new sales to Tambun in FY15 if there is no delay.
Pearl City Mall, even though only a small 2-storey mall, will open to public in 2 weeks time.
Besides, Jit Sin SPS branch should be able to start student intake for year 2017, and the plan to set up a private hospital in Pearl City is still on-going.
For 2016, new sales might not be that good but Tambun should not have a problem to surpass FY15's figure.
It should give around 9 sen dividend for FY15, which means a dividend yield of 6.8% at current share price of RM1.33.
MATRIX
Despite soft property market, Matrix still manage to sell more properties in 2015 which I think is rare in the sector.
Matrix bags a record-breaking RM805mil new sales in FY15 compared to RM630mil in FY14. Thus, unbilled sales also rise to RM633mil from RM429mil.
In FY16, Matrix will concentrate mainly on its Bandar Sri Sendayan, where it will launch projects worth more than RM1bil there in 2016.
It will build a new extreme park in BSS to make the township more appealing, while I think Matrix may end up operating a private hospital in the future.
Matrix has declared total 14.4sen (adjusted) dividends for FY15. This is a 6.0% yield at current share price of RM2.40.
Nice sharing BD, my wife portfolio still holding Matrix for Dividend puerpose.
ReplyDeleteNice to hear from you Harry. You mean you have sold yours? :)
DeleteThanks BD for your efforts. Really appreciate it. I have been slowly accumulating Matrix-wa over the past few days.
ReplyDeleteBeing a warrant holder, I'm ok without receiving any dividend. I'm also ok taking on the risks. I think it is just a matter of time property will be back into the limelight. The three you elaborated are outstanding developers. If they could do well during the bad times, I expect them to spearhead their peers when this sector is back into action.
I'm willing to wait for next couple of years to reap the fruits.
Cheers~
Hi Angie, wish yours and my patience paid off :) Property really needs more time I guess.
DeleteIs all warrants in Bursa an american options or european options?
DeleteThere is no visible catalysts to boost the property sector in near future, on the other hand there are factors not in favor to it. BN is putting efforts to reduce individual debts, see many banks put more caution to approve loan at but give higher interest to attract more savings, low demands from buyers as negative sentiment around. If not property sector, what sectors have more prospects in 2016?
ReplyDeleteI think so, loan rejection is not to be overlooked. I can't see any particular sector that will excel in 2016, may be manufacturing and tech sectors still have legs??
DeleteBD, you may want to study Jaks Resources Bhd. I like this stock for its increasing earnings which are sustainable going forward. Apart from strong order book, the management is also working on paring down its gearing from 1.0 to 0 (net cash), thus saving them the loan interest which can further giving a boost to its bottom line.
ReplyDeleteAny good link about Jaks to share?
DeleteHi BD. The followings are the links
Delete1. http://klse.i3investor.com/blogs/kenangaresearch/92737.jsp
2. http://unclezmalaysia.blogspot.my/2015/12/i-will-fall-in-love-with-this-stock.html?m=0
3. http://unclezmalaysia.blogspot.my/2016/03/will-anyone-loves-this-stock.html?m=0
Thanks Angie for your info.
DeleteI get that JAKS near term catalyst will be its RM1.9bil power plant construction job in Vietnam which I assume will be 100% credited into JAKS account. Construction should have only just begun and is expected to be completed in 3-4 years. So it can contribute very positively to JAKS, about RM500mil a year in average.
After that, from 2020 tentatively, JAKS will enjoy recurring income from the operation of the power plants, with its 30% to max 40% stake. However, I'm not sure how much it can get.
I think this stock has potential, but of course things may not run according to plan just like Mudajaya's case. I'll watch it closely.
Hey BD, what plantation stock u're gonna buy right now, TSH?
ReplyDeleteTSH just can't get its gearing down, it's a bit of concern to me... I like CBIP more :)
DeleteBD, it appears that the MKH you recommended last Decembet is now gaining attention from investing community. Obviously, there is a change of theme play taking place, i.e. from export to plantation. As per your highlights, MKH is traded at cheap valuation, and more importantly its bottom lines are set to increase from year to year. Ringgit stronger will also help.
ReplyDeleteConstruction also has good prospects. Very likely this will be followed by Property which will benefit MKH in the process.
Maybe the time has ripe for us to buy into MKH.
MKH is not bad indeed. Now it looks like construction and plantation are gaining traction?
Delete