Stock Focus SBC’s 9M results and outlook attract upgrades and coverage

by **Cals** Thu 10 Apr 2014, 13:43

Stock Focus SBC’s 9M results and outlook attract upgrades and coverage

Business & Markets 2014

Written by Ahmad Naqib Idris Adzman Shah of theedgemalaysia.com

Thursday, 10 April 2014 13:00

KUALA LUMPUR (Apr 10): SBC Corporation Bhd’s strong performance in 9MFY14 and bright outlook have spurred analysts to upgrade the stock.

The Sabah-based company has reported a net profit jump of 55% year-on-year to RM23.5 million and revenue rise of 41% to RM110.9 million for nine months to December 31, 2013.

“Taking cue from the strong 9M14 results, we have raised our FY14E earnings accordingly by another 10% to RM32.3 million as we factored in faster progress from two projects,” said Kenanga Investment Bank.

Kenanga attributed the company's performance to billing progress contributions from its projects namely The Peak @ Kota Kinabalu and The Dex Suites @ Kiara East.

While maintaining “trading buy” on SBC Corporation Bhd, the research house has raised the company’s target price (TP) by 38% to RM3.24 from RM2.35.

The share price of SBC has appreciated by 80% since June 2013. At 12.30 noon break today, SBC shares were traded at RM2.22, up 3 sen or 1.4%.

In its note today, Kenanga also said it maintains a positive outlook on the company.

The research house highlighted that SBC has a total gross development value (GDV) of RM6.3 billion in the pipeline, from its projects planned for the next seven to eight years, while its unbilled sales stand at RM200 million.

SBC's upcoming projects include Kiara East, Jesselton Quay, Batang Kali development in joint venture with PKNS, Cantoment Square, and The Peak.

Concurring with Kenanga, CIMB Investment Bank Bhd in its initiation coverage on the company, has given SBC an “add” call and a higher TP of RM3.96.

In a note last week, the research house said that the group’s Jesselton Quay JV project in Sabah would be a catalyst to its share price.

“We are particularly excited about the RM1.8 billion Jesselton Quay development, an integrated seafront project in Kota Kinabalu, backed by the Sabah state government,” said CIMB.

The research house added that the company is well-known in Sabah, but has a low brand profile in the Klang Valley, as SBC has been focusing on the Kota Kinabalu property market over the past 10 years.

“However, given its rising number of property launches in the Klang Valley over the past few years, we believe that it is only a matter of time before investors grasp SBC’s potential,” said the research house.

CIMB expects SBC to get a major boost to its unbilled sales by the end of 2014, after it launches new projects such as Jesselton Quay and Kiara East, which are valued at RM500 million per project.