Expect to turnaround in 2022
Concall note
After the poor operating performances in 2020 and 2021 when UEMS reported losses, management aims to turnaround the company in 2022, supported by stronger sales and progress billings as well as land sales. It is targeting to dispose MYR300m worth of non-core landbank this year. UEMS has also set a property sales target of MYR1.5b for 2022 (2021: MYR1.46b). Surprises could come from the resumption of dividend payment. We maintain our earnings forecasts and MYR0.35 TP (on 0.3x PBV). HOLD.
Set MYR1.5b sales goal for 2022
We recently hosted a concall with UEMS. UEMS has locked in MYR1.46b sales in 2021 (+30% YoY; 71% from Klang Valley [KV]), or 22% above its initial sales target. Management has set a flat sales target of MYR1.5b for 2022 driven by MYR3.3b worth of new launches (52:24:24 Klang Valley: Johor: Melbourne) in 2022. UEMS will launch its project (AUD250m GDV) in Collingwood, Melbourne in 2H22. It is now at the stage of applying for the planning permit for the project. Despite the end of the Home Ownership Campaign in Dec 2021, UEMS has seen encouraging responses for its KV properties thanks to its aggressive marketing campaigns e.g. “Happy Duo Duo” that offers free legal fees for loans and SPA, and
waiver of stamp duty on loan agreement and MOT for selected products.
Solving the root of the problem
Management has been focusing on rectifying internal issues over the last one year and it has come out with several strategies including expediting property launches by creating new product pipelines, reviewing existing land use, improving cost structure and divesting some loss-making JVs as well as non-core assets. It is targeting to divest MYR300m worth on noncore assets/landbank and some of these asset sales could materialize in 1H22, we understand.
Surprises may come from dividend payment
We maintain our earnings forecasts pending the release of its 4Q21 results on 23 Feb. Potential surprises could come from the resumption of dividend payment from 2022 onwards. To recap, UEMS has not been
paying dividend since 2016 despite having a dividend payout policy of 20- 40% of its realised PATAM.