EO-Improved Outlook With Higher New Property Sales For FY15-MIDF-310315

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: HOLD

Target Price: 2.05

9MFY15 earnings missed significantly

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: SELL

Target Price: 1.88

E&O - Ramp-up in launches and progress billings to fuel FY15 growth

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: BUY

Target Price: 2.67

E&O - STP2 back on track

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: BUY

Target Price: 2.67

Eastern & Oriental Bhd - 1QFY14 off to a slow start

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: ZJ

Price Call: BUY

Target Price: 2.56

E&O - RM25b GDV for the second phase of Seri Tanjung Pinang

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: BUY

Target Price: 2.67

Planning for next 3 financial years and beyond

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: BUY

Target Price: 2.45

JV with one of the largest developers in Japan

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: MIDF

Price Call: BUY

Target Price: 1.91

Eastern & Oriental - Planting Seeds of Successful Partnership

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: PUBLIC BANK

Price Call: BUY

Target Price: 2.20

We initiate with an Outperform call and a RM2.20 target price (46% upside). We believe larger developers' competitive positions have improved with their sizable landbank and ties with government-linked companies. The property industry is getting consolidated, with the larger developers commanding better margins and higher market share.

• E&O's premium branding, prime landbank and marketing prowess in our view, attracted Sime Darby to emerge as the major shareholder and roped in Mitsui Real Estate Sales Co LTd and Khazanah-Temasek as marketing and JV partners. These collaborations could broaden its market reach by leveraging on the partners' huge landbank and cross-marketing.
• In 2012, The Group will be busy selling Phase 2-3 Quayside condominiums in STP1 Penang with estimated GDV of RM1.2bn(average ASP RM1250psf) and possibly, launching a new RM360m (RM1200psf) condominium project in Jalan Yap Kwan Seng. Medini mixed development (GDV3bn) is targeted to be launched on 1QCY13.
• Our fully diluted RNAV for E&O is RM3.10. Potential catalyst include final approval for STP2 (760 acres, GDV RM 12-13bn), JV's with Sime Darby (37,000 acres landbank with an estimated RM100bn. GDV) and realizing its KPI of targeting RM250-300m in FY12/13.

Source: PublicInvest Research Research - 2 April 2012
Download: Research PDF

Property & M-REIT - NEUTRAL - 28 March 2012

Stock Name: UEMLAND
Company Name: UEM LAND HOLDINGS BHD

Research House: KENANGA

Price Call: BUY

Target Price: 2.65

Stock Name: UOADEV
Company Name: UOA DEVELOPMENT BERHAD

Research House: KENANGA

Price Call: BUY

Target Price: 1.65

Stock Name: SPSETIA
Company Name: SP SETIA BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 3.90

Stock Name: IJMLAND
Company Name: IJM LAND BERHAD

Research House: KENANGA

Price Call: HOLD

Target Price: 2.28

Stock Name: MAHSING
Company Name: MAH SING GROUP BHD

Research House: KENANGA

Price Call: HOLD

Target Price: 2.18

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: KENANGA

Price Call: SELL

Target Price: 1.49

Stock Name: HUNZPTY
Company Name: HUNZA PROPERTIES BHD

Research House: KENANGA

Price Call: SELL

Target Price: 1.44

We are upgrading the PROPERTY Sector to NEUTRAL fromUNDERWEIGHT. The sector will be unexciting because of weaker fundamentals onthe back of a tighter banking liquidity. We also believe that the Malaysianproperty sector has hit peak demand after two consecutive years of >20% YoYgrowth in sales. But downside risk will be cap by 1) developers' strongearnings visibility; 2) changes of sales mix towards the affordable segmentplus Johor products will buck the general flattish trend and allow for decent salestargets; 3) the market has probably priced in the negatives in the sector; 4)Bank Negara unlikely to introduce further tightening measures. We reiterateOUTPERFORM on UEMLAND (TP: RM2.65) and UOAD (TP: RM1.65) while MARKET PERFORMratings are maintained on SPSETIA (TP: RM3.90), IJMLAND (TP: RM2.28), MAHSING(TP: RM2.18).

We retainedUNDERPERFORM ratings on E&O (Top UNDERPERFORM; TP: RM1.49) and HUNZA(TP: RM1.44). M-REIT and property investment remains as OVERWEIGHT as 'flight tosafety' options given our 2Q12 house view of 'top slicing', with CMMT (OP; TP:RM1.55) and KLCC Property (MP; TP: RM3.45). Listing of IGB REIT will keepvaluations high. The market's anticipation of KLCC potentially REIT-ing some ofits assets will also add excitement to the sector, although we believe it willnot likely be in the near term (refer to our 21/3/12 report, 'REIT-ing?'). Our2Q12 Top OUTPERFORM is Axis REIT (TP: RM2.82) for 1) its strong acquisitionpipeline, which allows for faster NAV growth and hence quicker realisation ofits valuations;  2) limited officeoccupancy risks given its quality tenants; 3) there being less choices of goodoffice/industrial REITs compared to retail ones and 4) its net dividend yieldof 6.0% is higher than CMMT's 5.5%.  4Q11results were mainly within expectations, save for UEMLAND which exceeded our estimate. Developers enjoyed strongearnings growth of >40% for 2011 given their last two years' strong sales.Hunza Properties was the exception with a sharp earnings decline of 30% as ithad held back launches. Generally, the developers were able to meet their 2011sales targets, implying a 10%-50% YoY growth in sales. Meanwhile, propertyinvestment and M-REITs results under our coverage came in withinexpectations. 

Weak fundamentalswill keep the sector unexciting. The tighter mortgage assessment criteria wasobvious over the last few months based on developers' feedback and a sharp MoMdrop in Jan-12 mortgage loans approvals. Whilst residential demand interest isstill strong, loan approval periods have more than doubled. We also understandthat bank valuations of properties, even for new launches, have been toneddown, affecting buyers' effective margin of financing. Many are not getting thefull 90% margin of finance even for their 1st or 2nd  homes, given the current residential marginof finance of 80%-85% for new launches. Interestingly enough, developers underour coverage have lowered their 2012 sales growth targets from their previousquarter's guidance of 20%-60% to 5%-50% now. Those with more bullish targetshave 1) strong exposure to Johor (a market which we are very bullish on) withready launches like UEMLAND and SPSETIA; 2) overseas projects like Australia, whichare still enjoying favorable property dynamics like SPSETIA and 3) very highlyspecialised projects like UOAD, which are looking at potential en bloc sales oftheir MSC status buildings. Although it is too early to say we have seen theworse of the tighter banking liquidity given the limited data of just theJan-12 month (policy was effective 1-Jan-12), we note that Jan-12 residentialloans approval decline of 24% MOM was the sharpest is the last 12 months. Webelieve the situation will continue to persist until Bank Negara relaxes itsresponsible lending guidelines, although on the positive side, Bank Negara isunlikely to impose further tightening measures. Landbanking news flow is thin, which reinforces our view of a lacklustreyear. 

But strong earningsvisibility will limit further downside risks. We do observe more mass housingand Johor landbanking, as well as launches in the affordable housing segment.We expect this trend to continue throughout the year as developers lean theirearnings mix towards these products to realise sales targets. For now, theirsales targets look achievable as developers will be rolling out variations offinancing packages, while rebates are also here to stay. However, high volume mass housing sales also meansless attractive margins. We will be monitoring the mass market closely as tighterbanking liquidity seem to be hurting first home owners.  Ironically, nearly 50% of applicants for theMy First Home Scheme (100% financing for homes RM400,000/unit or less for firsthome buyers earning <RM3000/month). That said, we think the market haspriced in the bulk of the negative policy news and expect the sector to rangebound at its Fwd PBV mean (KLPRP CY12 PBV of 0.8x @ 6-year average). Also, mostof our developers (except for Hunza) have high unbilled sales providing strong earningsvisibility of 1-1.5 years. Developers with good dividends, like UOA (4.6% netyield) and MAHSING (4.7% net yield), should limit their share price weakness,provided they are still able to meet their sales targets.   

Source: Kenanga

3QFY12 results within expectations

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: ZJ

Price Call: BUY

Target Price: 1.92

E&O - Strong demand persists

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: HWANGDBS

Price Call: BUY

Target Price: 1.80

Eastern & Oriental; Hold; RM1.57
Price Target: RM1.80 (Prev RM1.50); EAST MK

Results slightly below our estimates but ahead of consensus. Strong take-up for Andaman condos at record ASP. Maintain Hold, raise TP to RM1.80 from RM1.50

Source: HwangDBS Research 28 Feb 2012

Eastern & Oriental - Newsflow to raise the roof?

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: CIMB

Price Call: BUY

Target Price: 1.77

Target RM1.77

A likely strong 4Q due to 9M new sales of RM440m is the reason why E&O's 9MFY3/12 results are broadly in line despite coming in at 48% of our full-year forecast. We expect newsflow to pick up pace with the release of details on the tie-up with Sime Darby and STP approval.

Source: CIMB Daybreak February 28, 2012, PDF Report

A niche luxury lifestyle developer

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD

Research House: ZJ

Price Call: BUY

Target Price: 1.60

E&O - E&O building new growth drivers

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD
Research House: CIMB

Eastern & Oriental Bhd
(May 31, RM1.49)
Maintain outperform at RM1.49 with revised target price of RM1.96 (from RM1.63): E&O's 3MFY11 net profit missed consensus by just 1% but was 10% above our forecast. However, this is nothing to shout about as it comes after two quarters of big shortfalls and significantly marked-down forecasts.

Still, we are encouraged by the pick-up in sales in Penang and the appointment of Eric Chan as deputy managing director. We now raise FY12/13 earnings per share by 2% to 45% for the stronger Penang sales and reduce the target discount to our RM2.80 revised fully-diluted realisable net asset value (previously RM2.72) from 40% to 30% given the likely positive news flow on Seri Tanjung Pinang (STP) Phase 2.

This raises our target price from RM1.63 to RM1.96. We maintain our 'outperform' rating as the share price could be catalysed by: (i) finalisation of approval for STP Phase 2; and (ii) newfound management dynamism and lofty targets.

E&O's 4Q results topped expectations and pushed FY11 net profit 10% past our forecast. Net profit for 4Q slumped 72% year-on-year but almost quadrupled quarter-on-quarter due to the pick-up in condo sales in Penang. Net profit for FY11 fell 56% on the back of a 23% decline in turnover.

The poorer full-year performance reflects significant pre-operating expenses for Lone Pine Hotel and Straits Quay Retail. The two sen final dividend was lower than last year's 3.8 sen but in line with our expectations.

The Quayside condos in Penang are finally selling fast and prices have appreciated significantly too. The first block, launched in early 2010, has achieved more than 80% take-up and more than 70% of the second and third blocks have been sold. Prices have risen from an average of RM740 psf for the first block to over RM900 psf.

The smaller units have seen faster price appreciation and have transacted at nearly RM1,200 psf. E&O will soon launch the fourth block at prices 5% to 10% higher than the third. So far, the group has sold RM700 million worth of condos and has RM1.3 billion more to go.

Chan was recently promoted from executive director to deputy managing director and will focus on the group's property development activities while major shareholder and managing director Datuk Terry Tham will focus on the hotel and leisure division.

We view Chan's appointment positively as he has set some ambitious earnings targets, 70% to 150% above our previous forecasts. The earnings growth will be driven both by organic growth and acquisitions or joint ventures. We also expect strategic tie-ups to materialise, particularly after approvals for STP 2 have been secured. ' CIMB Research, May 31


This article appeared in The Edge Financial Daily, June 1, 2011.

E&O - HDBSVR maintains Buy on E&O, up TP to RM1.70

Stock Name: E&O
Company Name: EASTERN & ORIENTAL BHD
Research House: HWANGDBS

KUALA LUMPUR: Hwang DBS Vickers Research has raised the Target Price for Eastern & Oriental Bhd (E&O)'' to RM1.70 (from RM1.40) based on 20% discount to RNAV of RM2.14.

It said on Wednesday, Jan 12 E&O's net gearing has improved significantly to 32% (2QFY10: 79%) post-rights issue, while unbilled sales stands at a record RM605 million (2.1x FY10 property development revenue).

'Given its prime landbank, strong execution track record, and attractive valuation, we see E&O as a potential M&A/JV candidate,' it said.