HLIB maintains 'buy' call on Sunway (5211)

Hong Leong Investment Bank (HLIB) said today the lower revised target price was mainly due to the postponement of RM300
million gross development value (GDV) for Sunway Geo at South Quay and RM180 million GDV in Tianjin, China.

The investment bank said it was maintaining its "buy" call on Sunway Holdings Bhd's shares with a revised target price of RM2.93 from RM3.20.

"Although investors may perceive this negatively, we have to firstly understand that Sunway tends to launch its products at a premium of some 10 to 30 per cent compared to its neighbouring developments.

"Due to the premium pricing, the take-up rate for Sunway's launches have been slower compared to the rest of its peers," it said in a research note.

The research house welcomed Sunway's decision to rollback its new launches as it would avoid having unnecessary working capital tied-in and with a higher take-up rate target, it would translate to faster monetisation of Sunway's development projects.

"Hence, we believe we are beginning to see the positive changes arising from the merger in the form of prudent risk-adjusted development ventures to ensure shareholders' interests are protected," it added. -- Bernama