PETALING JAYA: Apex Securities announced today that it has started its coverage on Lagenda Properties Bhd at RM1.24 with a fair value of RM1.52.

In a note today, Apex highlighted Lagenda’s success in recording a profit margin of more than 20%, despite offering only affordable products in the property market. The research house attributed this success to Lagenda’s strategic advantages over its competitors.

“These include acquiring large parcels of low-cost land in non-urban areas, in-house construction capabilities, strategic partnerships, and achieving economies of scale through developing over 10,000 units in their key townships, distinguishing them from competitors,” it said.

Apex projected that Lagenda’s revenue will grow further at a compound annual growth rate (CAGR) of 15.8%, following a steady upward trajectory in earnings from RM95.9 million in financial year 2019 (FY2019) to RM178.1 million in FY2022.

“We project a moderate escalation in earnings induced by higher interest rate costs, therefore, arriving at a fair value of RM1.52 based on a 20% discount on Lagenda’s estimated RNAV (revalued net asset value),” it noted.

Lagenda specialises in developing affordable landed properties and integrated townships targeted for B40 and M40 income households in Malaysia.

On the property market, Apex remarked that the supply of affordable housing is currently insufficient despite the presence of high demand for the product, largely due to limited transportation access and low demand for high-rise units.

At the same time, the market is also faced with high numbers of unsold units in the other property segments.

However, Apex Securities observed that there is a shift towards offering greater affordability in the property market.

This, it said, coincided with a worsening price-to-income ratio, which indicates that property prices have increased and incomes have declined.

As at 12.02pm, Lagenda’s share price was flat at RM1.24, giving it a market capitalisation of RM1.04 billion.