Aims to turnaround in 2022
Results below but sales above expectations
UEMS’ 4Q21 core net loss of MYR61m (from net loss of MYR85m in 4Q20) were below our and consensus expectations but 2021 sales of MYR1.46b were above our and management expectations by +22%. Management has set a new sales goal of MYR1.5b for 2022 (+2.7%). We raise our FY22/23 earnings forecasts by +71%/+34% after factoring in MYR1.5b sales target for 2022 (+7%), higher land sales (+2.5x) and the actual 2021 results. Our TP is intact at MYR0.35 (on an unchanged 0.3x FY22 PBV). HOLD.
Ended 2021 with losses
Excl. MYR93.5m one-off items (incl. impairment on inventories [MYR29.2m], investment properties [MYR12.8m], development cost [MYR20.6m] and net allowance for doubtful debts [MYR15m]), 4Q21 core
net loss was MYR60.9m (+28% YoY, -37% QoQ), bringing 2021 core net loss to MYR120.9m (+31% YoY, from MYR174.8m core net loss in 2020) vs. our/consensus full-year net loss estimates of MYR73m. The variance in earnings was due to higher-than-expected operating costs, we reckon.
Sets flat sales target in 2022
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. Despite the end of the Home Ownership Campaign in Dec 2021, UEMS has seen encouraging responses for its Klang Valley’s properties thanks to its aggressive marketing campaigns. UEMS has MYR140m worth of bookings in end-Jan 22.
Earnings adjustments
We raise our FY22/23 earnings forecasts by +71%/+34% to factor in higher sales assumption of MYR1.5b (+7%) and higher land sales of MYR300m in 2022 (+2.5x) as well as the actual 2021 results. UEMS is looking to turnaround in 2022 with more new launches, stronger progress billings post lock-down and potential asset/land sales (MYR300m). UEMS’ unbilled sales stood at MYR2.4b in end Dec 2021 (1.8x of our FY22 property development revenue).