Sunway - Accumulating Landbank In Penang (RHB)

Sunway -
Target Price: MYR3.33
Price: MYR2.64
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).



Source/Extract/Excerpts/来源/转贴/摘录: RHB-Research,
Publish date: 18/12/13