Aspen (Group) Holdings Ltd - CIMB Research 2017-11-13: Strong 3Q Performance

Aspen (Group) Holdings Ltd - CIMB Research 2017-11-13: Strong 3Q Performance ASPEN (GROUP) HOLDINGS LIMITED 1F3.SI

Aspen (Group) Holdings Ltd - Strong 3Q Performance

  • Aspen (Group) Holdings Ltd's 9MFY17 net profit accounted for 57% of our FY17F estimate, which we deem in line.
  • RM1.015bn of locked-in pre-sales to be progressively recognised from 4Q17.
  • More new projects in the pipeline; IKEA store to open in 1Q19.
  • Maintain Add with an unchanged TP of S$0.29.

3QFY17 results highlights 

  • Aspen reported a significant jump in 3QFY17 net profit to RM24.9m on a fivefold increase in revenue to RM137.9m. The improvement was due to progressive recognition of billings from ongoing projects and sale of a land parcel for a private medical centre, partly offset by RM7m one-off listing expenses. 
  • 9M cornet profit made up 57% of our FY17F forecast, which we deem in line as we anticipate more progressive billings to be booked in 4Q.

Ongoing projects continue to experience better take-up rates 

  • Take-up of ongoing projects at Aspen Vision City (AVC) such as Vervea is now at 88.5% while Vertu is 64.6% sold. 
  • On Penang Island, Beacon Executive Suites’ take-up rate has increased to 63.6% and Tri Pinnacle’s is holding steady at 82.7%. Together this translates to RM1.015bn worth of unbilled pre-sales as at end-3QFY17.

Another 4 projects with potential GDV of RM2bn in the pipeline 

  • Aspen has 4 new projects lined up, with a potential GDV of RM2bn. These include HH Park Residence on Penang Island, Viluxe bungalows, Vittoria Financial Centre commercial space and VOG Lifestyle Residence comprising a block of hotel, office suites and residential and retail spaces, at AVC. 
  • Recent efforts to boost home-ownership announced in the Malaysian Budget and active promotion of Batu Kawan Industrial Estate by the Penang Government should continue to underpin medium-term demand.

IKEA store expected to open in Batu Kawan in 1Q2019 

  • More importantly, the construction of IKEA store is on track and the building is scheduled to open in 1Q19. When completed, the IKEA store, the first one in Northern Malaysia, and the adjacent Bandar Cassia Shopping Centre are expected to increase the attractiveness of the Batu Kawan area. 
  • Meanwhile, the group had recently acquired a mixed SOHO, serviced apartment and retail development site in Kajang for RM66.7m, broadening its footprint in Malaysia. This site has a potential GDV of RM500m.

Maintain Add 

  • We leave our FY17-19F earnings estimates unchanged. Our target price of S$0.29 is based on a 45% discount to RNAV of S$0.53. We retain our Add rating. 
  • Aspen has a robust balance sheet with a net cash position of RM92m. This puts the group on a strong footing to acquire more development land for growth. 
  • Downside risk is a slowdown in the Penang property market.

LOCK Mun Yee CIMB Research | http://research.itradecimb.com/ 2017-11-13
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 0.290 Same 0.290