Friday, September 2, 2011

OSK Research drops YNH Property from coverage

KUALA LUMPUR: OSK Research has dropped YNH Property from its coverage with a Not Rated recommendation. It previously had a Buy recommendation on YNH with a fair value of RM3.03.

The research house said on Friday, Sept 2 YNH's 1HFY11 results came in below its and consensus expectations, accounting for around 40.7% and 39.1% of its and consensus FY11 net profit forecasts.

'Year-on-year revenue was down by 34.8% due to lower contribution from CONSTRUCTION [] revenue, but net profit was only 2.1% lower year-on-year owing to better operating margins. Nevertheless, due to resource re-allocation and portfolio reshuffling, we are ceasing our coverage on YNH with a Not Rated recommendation,' it said.

OSK Research said YNH reported a net profit of RM30.1 million for 1HFY11, which was below expectations, as the 1HFY11 net profit only accounted for around 40.7% of its FY11 forecast.

Year-on-year revenue fell 34.8%, driven by significantly lower construction revenue. However, net profit was only down by a far smaller 2.1%, attributed to higher margins as the result of lower construction revenue, which typically commands lower margins.

'EBIT margin for 1HFY11 improved significantly to 43.6% versus 30.4% over the same period last year. Quarter-on-quarter revenue was down by 12.2%, attributed to flat progress billings as well as the absence of sales of shop lot land parcels in Manjung in 1QFY11,' it said.

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