1QFY12 Results. 1Q ended June 2012 Hua Yang (HYB) revenue and profit for the period grew by 66% and 135% YoY respectively. Margins experienced expansion between 5% or 7% on the back of a lower 3% taxation rate. The margin expansion was contributed by improved economies of scale due to larger number of Klang Valley projects (One South and Symphony Heights).
Recommendation. We have revised upwards our fair value estimate for Hua Yang at RM2.56. Our fair value is based on its GDV and our estimated RNAV of RM4.28 per share. The RNAV approach invariably results in a value higher than current BV per share, but we discount it for fair value estimation purposes at 0.60x in line with observed discounts to industry-wide P/BV multiples for property stocks with capitalisation of less than RM500m.
Recommendation. We have revised upwards our fair value estimate for Hua Yang at RM2.56. Our fair value is based on its GDV and our estimated RNAV of RM4.28 per share. The RNAV approach invariably results in a value higher than current BV per share, but we discount it for fair value estimation purposes at 0.60x in line with observed discounts to industry-wide P/BV multiples for property stocks with capitalisation of less than RM500m.
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