KUCHING: Sentoria Group Bhd (Sentoria) will likely see encouraging take-up rate from the upcoming Borneo Samariang Resort City in Kuching, analysts believe.
TA Securities Holdings Bhd’s research arm (TA Securities) in a report, noted that despite the delay in Sentoria’s Sentoria Morib Resort City, Morib, the Borneo Samariang Resort City in Kuching is ready for launch in September.
“We understand that the maiden launch will comprise 428 units of Hotel Suites with a gross development value (GDV) of RM102 million.
“In our opinion, the take-up rate is expected to be encouraging given the shortage of good tourist class hotels in Kuching,” it commented.
Meanwhile, on its project in Morib, the research team noted that the official launch of Sentoria Morib Resort City, Morib, has been delayed to December 2015, as the group has yet to receive building approval from the state authority.
Currently, it gathered that the group is applying for land conversion.
“The company does not expect any sizeable new ventures over the medium term as it has plateful of projects across four key regions in Malaysia (outstanding GDV of RM9.8 billion), which will last the group for another 10 to 12 years.
“As such, Sentoria will focus on project execution and brand-building over the next three years,” TA Securities added.
On the group’s recently announced third quarter of the financial year 2015 (3QFY15) results, the research team noted that its first nine months of FY15 (9MFY15) net profit came below expectations at RM19.2 million.
“The variance was largely due to weaker-than-expected performance from property division and higher-than-expected effective tax rates,” it said.
Year-on-year (y-o-y), the group’s 9MFY15 revenue grew five per cent y-o-y to RM161.3 million mainly due to steady construction progress of its township projects in Kuantan but its net profit was flat at RM19.2 million, largely due to higher effective tax rates, TA Securities explained.
“The group’s 3QFY15 net profit plummeted 43 per cent y-o-y but increased 43 per cent quarter-on-quarter (q-o-q) to RM4.7 million.
“The weaker y-o-y performance was attributable to reduction in progress billing recognised given existing projects are reaching the tail-end. Comparing to 2QFY15, the sequential improvement in 3QFY15 was largely due to tax credit received during the quarter,” it added.
All in, the research team downsized its forecasts on Sentoria with its FY15 to FY17 sales assumptions slashed to RM122 million, RM290 million, and RM380 million respectively from RM282 million, RM420 million and RM481 million previously.
“Following the change in property sales and effective tax rates assumptions, we cut our FY15, FY16, and FY17 earnings by 23, 28, and 32 per cent,” it added, noting that it maintained its ‘sell’ recommendation on the stock.