KUALA LUMPUR: Maybank Research is picking Hua Yang Berhad, a housing developer specialising in homes costing under RM500,000, as its “hot stock” pick with a target price of RM3.73 from its current trading price of around RM3.03.
It said on top of sound management and solid recent performance, Hua Yang was unlikely to be affected by the credit-tightening measures introduced by Bank Negara as it was in the affordable property segment.
In fact, it stood to benefit from Budget 2013 due to improvements expected to be made to the My First Home Scheme.
Citing the Population and Housing Census Malaysia 2010 report, the research house pointed out that 25% of Malaysians purchasing property are first-time home buyers within the 25-40 age range. Hua Yang properties, particularly in Johor and Perak, are priced between RM100-400k a unit and 70% of its customers are first-time home buyers, and as such it was in a growth good position.
To date, Hua Yang has completed more than 13,000 residential, commercial and industrial projects with a gross development value (GDV) of more than RM1.8bil. It is primarily focused in three main regions – Selangor, Johor and Perak, with projects such as One South in Selangor, Taman Pulai Indah/Hijauan in Johor and Bandar Universiti Seri Iskandar (BUSK) in Perak.
“Consensus estimates HYB to make a net profit of RM89.7mil in financial year ended March 2014, translating to a five-year earnings compound annual growth rate (CAGR) of 59%. The stock is trading at a prospective CY14 PER of 5.6x, lower than its small/mid-cap peers’ average of 6.5x despite a superior return on equity (ROE) of 23%.
“It paid a dividend per share of 12 sen in the financial year ended March 2013 (33% net profit payout) and is expected to pay 14 sen dividend per share in the financial year ended March 2014, which translates to a net yield of 4.6%.
HYB has unbilled sales of MYR523m as at Mar 31, 2013 and plans to launch RM1bil worth of new projects in the financial year end March 2014, including six new projects in the Klang Valley, Johor and Perak. The group has 1,505 acres of landbank, of which 700 acres are undeveloped.
It has a remaining GDV of RM4.05bil which should last the group another 10 years. Recent land acquisitions in Desa Pandan, Puchong, Seri Kembangan and Shah Alam will boost its GDV in the Klang Valley to 50%, with another 30% from Johor and 20% from Perak.
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