KUALA LUMPUR: RHB Investment Bank Bhd (RHB Research) has maintained its 'buy' call on Eastern & Oriental Bhd (E&O) with a target price of RM1.38 despite better-than-expected earnings in the first quarter of financial year 2025 (1QFY25).
E&O's net profit rose 14 per cent to RM37.5 million in 1QFY25 from RM33 million a year ago, while its revenue grew twofold to RM165.7 million.
Despite the strong 1QFY25 results, RHB Research maintained its earnings forecasts for now.
Unbilled sales for the quarter were at RM1.35 billion, unchanged from 4QFY24.
The research firm said E&O's property sales momentum has remained strong, as all Senna and Fera landed homes at Andaman Island are now fully sold.
It said that 1QFY25 property sales totalled RM162.5 million with Senna and Fera homes accounted for RM63.9 million, while The Peak and Conlay raked in RM56.9 million and RM32.6 million.
Meanwhile, its low-density luxury serviced apartment project The Lume, with a gross development value (GDV) of RM689 million, received encouraging response.
RHB Research said the company plans to release its next marina serviced apartment project, with GDV of RM634 million, in the second half of financial year 2025 (2HFY25).
"Pipeline launches should be on track to meet E&O's RM850 million sales target."
"The company remains the key Penang property play to capture rising demand, driven by strong investments in the E&E (electrical and electronics) and semiconductor sectors," said RHB Research.
The firm said the strong response to the first batch of Senna and Fera landed houses is a good indication of the demand for high-end properties, given the average selling price of RM3.8 million for a terrace unit and RM5 million for a semi-detached house.
"We attributed the strong demand at Andaman Island to E&O's ability to build a premium community on Penang island, given the flexibility it has with its sizeable landbank," it added.