Jobs making a comeback
Annualised 1H13 core net profit was 1-2% above our and consensus’ full-year numbers. The results were above expectations due to over estimated tax rates, while 2H’s results should be better. 2H’s job flows should be good. The share price correction presents a good entry point.
Lower tax rates drive our FY13-15 EPS upgrades. But our target price (based on a 20% RNAV discount) is reduced as we update for balance sheet items. Maintain Outperform as the stock should continue to benefit from the Iskandar newsflow, with added catalysts from job wins and new land acquisitions. The stock’s real value is anchored by its huge land bank and longer-term prospects in Iskandar.
No surprises in 2Q13
Annualised 1H13 core net profit was 1-2% above our and consensus' full-year estimates. While 2H is a seasonally-stronger period, the results outperformance was also due to lower-than-expected tax rates. There were no major surprises from segmental results. Property and construction were the key revenue drivers, underpinned by YTD effective property sales of RM492m and the rapid recovery in job wins in the past 12 months. Improvements in the group’s EBIT margin in 1H should sustain in 2H. The interim single-tier DPS of 5 sen was in line.
Domestically, property sales prospects remain bright, with RM1.3bn of sales (70% local, 30% in Singapore) targeted for FY13, backed by RM1.8bn of unbilled sales. There has yet to be any maiden sales in Iskandar but the RM1.5bn launch GDV targeted for FY13 includes RM500m from Medini, with its first launch intended in Dec 13.
Strong job flows YTD
An outstanding order book of RM4.2bn has further upside from potentially new jobs in 2H13. The RM283m urban wellness centre project won recently marked Sunway's fifth contract in Iskandar, bringing total job wins YTD to RM1.8bn. The group could win 1-2 more jobs in the coming months given the RM500m-800m targeted wins in 2H. Sunway is also a strong contender for new MRT jobs.
Publish date: 30/08/13