Saturday, August 31, 2013

Sunway : Earnings On Track (MKE)

Buy (unchanged)
Share price: MYR2.75
Target price: MYR3.47 (unchanged)
Earnings On Track

Maintain BUY. Sunway’s 1H13 results were within expectations. 1H13 locked-in property sales of MYR492m are on track to meet its 2013 sales target. Given strong property product launches in the pipeline (≈MYR1.5b new launches in 2H13), Sunway could exceed its internal sales target of MYR1.1b for 2013 (2012: MYR1.6b). No change to our earnings forecasts and MYR3.47 TP (on 20% discount to RNAV).

Results tracking expectations. 2Q13 core net profit of MYR111m (+23% QoQ, +43% YoY), lifted 1H13 earnings to MYR201m (+42% YoY), making up 50-53% of our and consensus full-year forecasts. Earnings growth was mainly driven by: 1) MYR1.6b in property sales achieved in 2012, 2) MYR4.2b outstanding construction orderbook as at today, and 3) strong net income growth for SunREIT (+15% YoY).

Decent property sales recorded. Despite the lack of new launches in 1H13, Sunway has managed to lock in MYR290m in property sales in 2Q13, lifting 1H13 sales to MYR492m, or 45% of its MYR1.1b sales target for 2013. We think there is a high chance for Sunway to exceed its internal target for 2013 given strong pipeline launches including Sunway Iskandar phase 1 and the Novena project in Singapore. Our earninngs forecasts have impute MYR1.4b new sales in 2013.

Bidding for MYR600m worth of building works. We understand that Sunway is currently bidding for another MYR600m worth of building works. YTD, it has secured MYR1.76b of contracts, lifting total outstanding order book to MYR4.2b (2.6x of our construction revenue forecasts). This is close to our MYR1.8b job win target for 2013. Hence we make no change to our assumptions.

Preferred pick for Iskandar Malaysia play. We prefer Sunway to UEMS due to: 1) its relatively low foreign shareholdings of 5.9% (vs. UEMS' 20.4% as at July 2013), 2) cheaper valuations at 10.4x/0.9x PER/PBV (2014) vs. UEMS' 19.8x/2.0x, 3) support from the other businesses like construction, and 4) steady dividend income from SunREIT.

Source/Extract/Excerpts/来源/转贴/摘录: MKE-Research
Publish date:30/08/13

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