SINGAPORE (Aug 18): CIMB is maintaining its “add” call on Hatten Land with a target price of 38 cents on better fourth quarter operating performance.
In 4Q17, the Malaysia-based developer reported a trebling of net profits to RM59.7 million ($19 million) along with a 24% revenue increase to RM130 million.
See: Hatten FY17 earnings treble to $19 mil despite RTO expenses; declares maiden dividend
In a Thursday report, analyst Lock Mun Yee says that she remains positive about Malacca’s property market on improving tourist flows and planned megainfrastructure projects such as the KL-Singapore High Speed rail and Melaka Gateway.
“These developments are likely to transform the landscape of Malacca and boost its attraction as a holiday and investment destination,” says Lock.
In fact, Hatten’s better FY17 earnings came from progressive billings and higher sales in its developments in Malaccca – Hatten City P2 and Harbour City development.
The group’s Imperio Mall is already 60% taken up while 56% of Imperio Residences have been sold.
Concurrently, Harbour City Suites and Harbour City Resort saw further sales growth of 14% and 25%, respectively, bringing takeup rate to 95% and 49%. As at June, Hatten had remaining unbilled sales of RM662 million.
In July, the group launched the Satori mixed development, Malacca’s first wellness-themed integrated project, comprising Satori Suites, Satori Residences and Satori commercial.
“Although no details were given, we understand that the initial offering of the hotel suites garnered a strong booking rate. We expect this development to have a GDV of RM300 million ($95.3 million), which would extend the group’s forward income visibility,” says Lock.
The group’s balance sheet also showed improvement with a debt-to-equity ratio of 1.6x at end FY17.
Therefore, the group is well positioned to tap into growth opportunities, including the acquisition of land under its right-of-first-refusal pipeline from its sponsor, as well as potentially venture into other parts of Malaysia or overseas, adds Lock.
Shares in Hatten are trading at 20 cents as at 10.58am.
