Stock Focus UEM Sunrise hit by analysts downgrades after poor 2Q results, lower sales target

by **Cals** Tue 26 Aug 2014, 23:14

Stock Focus UEM Sunrise hit by analysts downgrades after poor 2Q results, lower sales target

Business & Markets 2014

Written by Jeffrey Tan of theedgemalaysia.com

Tuesday, 26 August 2014 14:11

KUALA LUMPUR (Aug 26): UEM Sunrise Bhd was met by a slew of analysts downgrades following its poor financial results in the second quarter ended June 30, 2014.
The downgrades also came as the property developer slashed its full-year sales target to RM2 billion from RM3.2 billion.
At 12.30pm today, UEM Sunrise shed 1 sen or 0.5% to RM1.93 on some 2.8 million shares done.
In a note, CIMB Investment Bank Research said it reduced target price (TP) to RM2.44 from RM2.93.
The research house also cut its FY14, FY15 and FY16 net profit forecasts by 10% to 12% to factor in the lower sales target and weak year-to-date sales.
“The biggest negative surprise was the cut in management’s new sales target for 2014 to RM2 billion from RM3.2 billion,” exclaimed Terence Wong, CIMB IB’s head of research.
Wong said with the RM2 billion sales target for the full year, UEM Sunrise would drop to third place after S P Setia Bhd and Mah Sing Group Bhd.
“Furthermore, the group’s new sales would only match those of UOA Development Bhd and Eco World Development Group Bhd, which are much smaller companies with less land bank,” he added.
However, he maintained an ‘add’ call for the stock as he believes the current share price has already factored in UEM Sunrise’s weak performance.
Kenanga Research, meanwhile, downgraded UEM Sunrise to ‘market perform’ call from ‘outperform’ and cut TP to RM2.05 from RM2.40.
The research house also reduced its FY14E and FY15E core earnings by 10% to 29%, given the lower property sales assumptions by 35% and 20% to RM2 billion and RM2.2 billion, respectively.
Noting she was not surprised, analyst Sarah Lim of Kenanga said the reduction in targets is mainly due to deferment of certain project launches.
“The move is not entirely surprising considering the recent cooling measures and negative news flow from Johor, which have affected sales,” she said.