Sunway enjoys solid property sales in 1HFY14

by **Cals** Fri 01 Aug 2014, 02:04

Business & Markets 2014

Written by Affin Investment Bank

Thursday, 31 July 2014 10:06

Sunway Bhd
(July 30, RM3.19)
Upgrade to add with target price of RM3.30: Sunway reported solid new property sales of RM620 million (+26% year-on-year [y-o-y]) for the first half ended June 30 of financial year 2014 (1HFY14), driven by strong take-up rates for both new launches (new launches worth RM435 million in 1HFY14) and older projects.
Notably, the group’s second-quarter (2QFY14) property sales were 56% higher quarter-on-quarter (q-o-q) at RM378 million (from RM242 million in 1QFY14). Broadly, Sunway’s 1HFY14 property sales were generated from various projects in different areas, in line with management’s strategy to pursue multiple launches at high demand locations.
Key projects that contributed to the strong sales performance include Sunway Velocity (RM156 million), Geo Residences (RM68 million) and Sunway Montana (RM71 million), as well as its Penang (RM70 million), Johor (RM27 million) and Singapore (RM77 million) projects.
Sunway’s maiden project in Medini, Johor — the 167-unit RM73 million Citrine office development — was reportedly sold out. The Citrine offices (746 sq ft to 1,671 sq ft at RM760 per sq ft [psf]) were launched on July 20, 2014 and have since achieved 100% booking rate.
Meanwhile, in the Klang Valley the group received 70% booking for its RM210 million Geo 2 serviced apartments (launched in July 20, 2014) and 62% take-up rate (+16% booking) for its RM270 million V Residence 2.
Overall, the group’s property projects in Malaysia have performed better than expected and we are optimistic that the its full-year property sales will likely beat our expectations of RM1.1 billion. We now expect actual sales to meet management’s target of RM1.3 billion.
In view of its stronger than expected property sales year-to-date, we have raised our 2014 and 2015 property sales projections by 15% to 18% to RM1.2 billion to RM1.3 billion. We have also upgraded our 2014 to 2016 earnings per share forecast by 5% to 6%.
We also raise our revised net asset value (RNAV) estimate by 4.7% to RM4.72 (from RM4.50) after factoring in higher profit margins and shorter development period for selected projects (Iskandar Malaysia, Sunway Geo, Sunway Velocity and Sunway Penang) in view of the stronger than expected property demand.
We like Sunway for its integrated real estate model, extensive experience in the construction sector and established footprint in Singapore. Key rerating catalysts include stronger than expected take-up rates for its upcoming launches. — Affin Investment Bank, July 30

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This article first appeared in The Edge Financial Daily, on July 31, 2014.[/size]