The BRT dedicated bus lane will have three stops to serve Sunway Resort City.
KUALA LUMPUR: AmInvestment Bank has kept a “buy” on Sunway Bhd
with an unchanged fair value of RM3.54 per share, based on a 15% discount to its sum-of-parts (SOP) value of RM4.18 per share and an implied PE of 11 times FY16 forecast.
It believed that Sunway’s long-term prospects were intact and the stock was currently trading at undemanding forward PEs of less than 10 times.
“The risks continue to be the lull in the property development market, but the construction division is expected to step up contributions to the group,” it said.
AmInvestment said Sunway posted a first quarter FY16 core net profit of RM104.5mil representing 20% and 19% of the house and consensus full-year forecasts, respectively.
“We deem the core earnings and overall operating performance to be within expectations. The bottom line was impacted by higher minority interest, stemming from the listing of the construction division, but boosted by an effective tax rate at 18.4%,” it said, adding that first quarter was traditionally weaker than fourth quarter due to seasonality.
It noted that the continuing slowdown in property development registered sales of only RM263mil as of end-March 2016 while unbilled sales amounted to RM2bil. It is targeting to launch RM1.6bil worth of projects this year. Property sales could rise to RM1.4bil from FY15’s RM1.2bil.
“Year-to-date, the construction division has secured RM2bil worth of internal and external projects, including the 60-month RM1.2bil MRT viaduct Package V201 (Sg Buloh –Persiaran Dagang line). As at end-March, the outstanding order book totalled RM5.02bil.
“The construction division registered better-than-expected margins to offset the shortfall in revenue. However, we expect bookings to pick up in the coming quarters as progress of the major projects gather pace,” AmInvestment said.
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