Target Price: MYR3.33
Accumulating Landbank In Penang
We raise our FV on Sunway to MYR3.33 (from MYR3.30) due to its new land acquisition in Penang. The land will be developed into a mix of commercial shops and high-rises worth a GDV of MYR1.5bn. Meanwhile, Sunway will likely hit MYR1.8bn in sales for FY13. Its sales target for next year will be at the same level, and we think this is achievable given its pipeline of projects. Maintain BUY.
New land near Air Itam. Sunway has successfully won the bid for 4.458 acres of freehold land at MYR251 psf (total sum: MYR267.4m) via open tender from CH Williams Talhar & Wong. The minimum reserve price was MYR200 psf. This level plot of land was originally owned by Lee Rubber, with a factory on-site.
A good price. Sunway paid a good price for the land, given the stubbornly high land value on Penang Island. While Jelutong land is already going at MYR400-500 psf, some parcels in Tanjung Tokong are priced at MYR500-1,000 psf. Based on our checks, Sunway’s land is some 100m away from EcoWorld’s project in Air Itam.
Adding MYR1.5bn to GDV. We are positive on this acquisition. The land will help Sunway widen its presence in Penang. Its exposure to this market is not big (145 acres) – about 6% of total GDV with this latest addition. The land will be developed into commercial shops, SOHOs and high-rise residences worth MYR1.5bn GDV, with ASP working out to a reasonable MYR590 psf based on 2.56m GFA.
Full-year sales likely to hit MYR1.8bn. As expected, Sunway will exceed its MYR1.3bn FY13 conservative sales target. Full-year sales are expected to hit MYR1.8bn (9M13 sales: MYR1.1bn). Going into FY14, management expects another MYR1.8bn in sales – achievable in our opinion, given its carefully selected pipeline of projects amidst the challenging market conditions. Key developments slated for 2014 launches include Velocity Service Apartments (GDV: MYR250m), South Quay Service Apartments (MYR200m), Bukit Mertajam (MYR150m), Sunway Iskandar (MYR550m), China Tianjin (MYR300m) and Mount Sophia Singapore (MYR2bn).
Maintain BUY. We make no changes to our earnings forecasts as the project is not expected to be launched next year. Due to the incremental value, we raise our FV slightly to MYR3.33 (from MYR3.30).
Publish date: 18/12/13