Company Result 1 June 2018 Titijaya Land Berhad

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1 JF APEX SECURITIES BERHAD (47680-X) Company Result 1 June 2018 Titijaya Land Berhad Steady as she goes BUY Maintained KLCI points Share Price RM0.37 Target Price RM0.64 Expected share price return 73% Expected dividend return 5.4% Expected total return 78.4% Stock Data Bursa / Bloomberg code 5239 / TTJ MK Market / Board Main / Industrial Syariah Compliant status Yes Issued shares (m) Market cap RM497.35m Par value RM week price Range RM Beta (against KLCI) m Average Daily Volume 0.51m 3-m Average Daily Value^ RM0.27m Share Performance 1m 3m 12m Absolute (%) Relative (%-pts) Major Shareholders % TITIJAYA GROUP SDN BHD TITI KAYA SDN BHD 7.2 AIA BHD 4.77 Estimated free float Source: Bloomberg Lee Chung Cheng , ext. 758 cclee@jfapex.com.my This report is also accessible at Result Results within our expectation. Titijaya Land Berhad (Titijaya) recorded a net profit of RM21.7m in its 3QFY18 results, up 13.0% yoy and 8.5% qoq. In 9MFY18, the Group posted RM62.3m in net earnings, which increased 4.5% yoy. The result is in line with our expectation, accounting for 73% of our full year net earnings estimate. Comment Stronger yoy results. The Group achieved better yoy performance in 3QFY18 on the back of higher revenue, +13.5% yoy mainly driven by progress works in H20 project, project completion in Primrose and the proceeds from partial land compulsory acquisition in Penang for the purpose of road widening works. Furthermore, the lower effective tax rate during the quarter (3QFY18: 22.1% vs 3QFY17: 34.0%) also underpinned its bottom line amid drop in PBT, -6.5% yoy as a result of higher administrative expenses incurred for professional fees in respect of corporate collaboration, staff cost and corporate exercise. Similarly, its 9MFY18 results were boosted by higher revenue (+26.0% yoy) and lower effective tax rate (9MFY18: 26.9% vs 9MFY17: 28.2%) in spite of higher operating expenses which offset the gain. Better qoq. The Group s top line tumbled 44.3% qoq due to half-yearly rental of RM7.9m received in 3QFY18 for temporary occupation and usage of its land in Shah Alam by LRT 3 contractors. Nevertheless, Titijaya managed to chalk up higher qoq results mainly attributable to commendable margins achieved (GP margin: +21.4ppts, PBT margin: +14.6ppts) with better margins on its completion works in Primrose, and H2O project progress recognition. New launches in the pipeline for FY19. The Group targets to launch a few projects totalling RM826m GDV in FY19 (2HCY18) which include: a) Damai Suria Phase 1 serviced apartment (previously known as Damansara West) with an estimated GDV of RM168m, b) 3rdNveue@KL Phase 2 serviced apartment with an estimated GDV of RM338m, and c) Riveria City@KL Sentral Phase 1 serviced suite with an estimated GDV of RM320m. We gather that the Riveria City project (70% stake) has received encouraging response with 500 units out of 800 units being booked during pre-launch due to its strategic location in KL Sentral, easily accessible to public transportation (TOD development) and relatively Please read carefully the important disclosures at end of this publication

2 affordable pricing of average RM k/unit (built up of 250sf with over RM1kpsf). Earnings Outlook/Revision No change to our respective FY18F and FY19F net profit forecasts of RM85.3m (+11.3% yoy) and RM91.2m (+6.9% yoy). Valuation/Recommendation Maintain BUY on Titijaya with a lower target price of RM0.64 (RM0.76 previously), after widening our discount to fully-diluted RNAV/share of RM2.55 to 75% (from 70%) to better reflect prevailing weak market sentiment towards property counters. Our revised target price now implies 10x FY19F PE. We continue to favour the Group in the long run as we believe the Group is able to fast track its projects execution to ride on the gradual recovery of property outlook. This is backed by its unique business model and landbanking strategy of scouting for joint venture and land-swap project opportunities with reputable government agencies and other synergistic partners, as well as its aggressive and innovative marketing efforts in targeting mass market housing segment. Figure 1: Quarterly Figures Year to 30 June (RMm) 3QFY18 2QFY18 3QFY17 qoq (%) yoy (%) 9MFY18 9MFY17 yoy (%) Revenue Gross profit Operating profit Pre-tax profit Net profit Core net profit Gross margin (%) / ppt EBIT margin (%) / ppt PBT margin (%) / ppt

3 Figure 2: P&L and Financial Summary Year to 30 June (RMm) FY2014 FY2015 FY2016 FY2017 FY2018F FY2019F Revenue Gross profit Operating profit Profit before tax Net profit Core net profit EPS (sen) DPS (sen) P/E (x) P/BV (x) Diluted EPS (sen) FD P/E Revenue growth (%) Net profit growth (%) Core net profit growth (%) Gross margin (%) Operating margin (%) PBT margin (%) Dividend yield (%) Net gearing (%) ROE (%) ROA (%) Figure 3: Balance Sheet (RM'm) FY2014 FY2015 FY2016 FY2017 FY2018F FY2019F Balance Sheet Cash Current assets Non-current assets Total assets Short term debt Current liabilities Long term debt Non-current liabilities Total liabilities Shareholders' equity MI Total equity Total liabilities & equity

4 Figure 4: Cash Flow (RM'm) FY2014 FY2015 FY2016 FY2017 FY2018F FY2019F Cash Flow Cash flow from operations Cash flow from investing Cash flow from financing Cash generated Cash at beginning Cash at end of period Figure 5: RNAV DCF of On-going projects Remaining GDV Stake development profits Basis RM(m) (%) H2O Cost of equity: 9% 3 Elements Mutiara Residence Kemensah Seri Alam Residence Park Residency Cheras KL Sentral Klang Sentral Jln Ampang The Kota Kinabalu Odeon KL Trio Monfort Penang Damansara West Total Shareholders equity as of 2QFY18 Proceeds from ICPS m RM0.82 RNAV Enlarged no. of shares FD RNAV/share

5 JF APEX SECURITIES BERHAD CONTACT LIST JF APEX SECURITIES BHD 6 th Floor, Menara Apex Off Jalan Semenyih Bukit Mewah Kajang Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) PJ Office: 15 th Floor, Menara Choy Fook On No. 1B, Jalan Yong Shook Lin Petaling Jaya Selangor Darul Ehsan Malaysia General Line: (603) Facsimile: (603) DEALING TEAM Kong Ming Ming (ext 3237) Shirley Chang (ext 3211) Norisam Bojo (ext 3233) Institutional Dealing Team: Zairul Azman (ext 746) Fathul Rahman Buyong (ext 741) Ahmad Mansor (ext 744) PJ Office: Mervyn Wong (ext 363) Azfar Bin Abdul Aziz (Ext 822) Tan Heng Cheong (Ext 111) RESEARCH TEAM Lee Chung Cheng (ext 758) Lee Cherng Wee (ext 759) Low Zy Jing (ext 754) Nursuhaiza Hashim (ext 752) Siau Li Shen (ext 753) JF APEX SECURITIES - RESEARCH RECOMMENDATION FRAMEWORK STOCK RECOMMENDATIONS BUY : The stock s total returns* are expected to exceed 10% within the next 12 months. HOLD : The stock s total returns* are expected to be within +10% to 10% within the next 12 months. SELL : The stock s total returns* are expected to be below -10% within the next 12 months. TRADING BUY : The stock s total returns* are expected to exceed 10% within the next 3 months. TRADING SELL : The stock s total returns* are expected to be below -10% within the next 3 months. SECTOR RECOMMENDATIONS OVERWEIGHT : The industry as defined by the analyst is expected to exceed 10% within the next 12 months. MARKETWEIGHT : The industry as defined by the analyst is expected to be within +10% to 10% within the next 12 months. UNDERWEIGHT : The industry as defined by the analyst, is expected to be below -10% within the next 12 months. *capital gain + dividend yield JF APEX SECURITIES BERHAD DISCLAIMER Disclaimer: The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of JF Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report. Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of JF Apex Securities Berhad and are subject to change without notice. JF Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. JF Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against JF Apex Securities Berhad. JF Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of JF Apex Securities Berhad. This report is also accessible at Published & Printed By: JF Apex Securities Berhad (47680-X) (A Participating Organisation of Bursa Malaysia Securities Berhad) 5