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Corporate Highlights
KSL Holdings Bhd
? Below expectation.
KSL’s 4Q10 core net earnings of RM9.9m (-28.6% yoy; -36.3% qoq) came in slightly below our full year estimate of RM63m and missed consensus estimate by 11%. Turnover fell 18% yoy and 9.7% qoq, mainly due to slower launches for new phases of the ongoing township projects as resources were largely allocated for the opening of KSL City shopping mall in Dec last year. Note that, headline net profit of RM71.7m was skewed by a one-off revaluation gain on KSL City shopping mall amounted to RM82.8m. Overall, full year performance was decent with a core net profit growth of 7.5% despite a slight drop of 4.1% in turnover. No final dividend was declared, but we believe it will be declared during AGM .
? Unbilled sales at RM143m.
Unbilled sales as at Dec 2010 stand at RM143.3m. The D’Esplanade @ KSL City made up about 85% of the amount. Total sales for the full year 2010 achieved RM212.6m, a slight 7% decline from last year’s total sales of RM228.1m. As mentioned above, we believe this was due to constraint in resources for other projects to ensure the timely opening of KSL City shopping mall. With the official opening of the shopping mall, we expect launches for township projects to resume to normal this year.
? Risks and concerns.
The risks include: 1) regulatory risk; 2) delay in approvals and launches; 3) competition from peers; and 4) country risks.
? Forecasts.
We fine-tune our forecasts slightly by 0-3% after we update the latest full year balance sheet numbers. Overall impact is minimal.
? Maintain Outperform.
We downgrade the stock’s fair value to RM2.60 (from RM2.78), based on a larger discount of 35% (from 30%) to RNAV, in view of its asset-heavy balance sheet as management has put on hold on its plan to dispose of the shopping mall, and after we update the RNAV estimate for balance sheet items. Future asset monetisation plan will be to dispose of the shopping mall together with other hypermarkets to a REIT.
