CIMB Research retained its Hold call for Sunway REIT as it expects the office and hotel segment to remain soft in 2016
KUALA LUMPUR: Sunway Bhd
’s 2016 core net profit came in above expectations while 2016 effective locked-in property sales of RM923mil were in-line, according to Maybank Investment Bank Research.
“Excluding RM24mil fair value gain from ESOS and investment properties, Sunway’s 4Q16 core net profit was RM162mil, lifting 2016 core net earnings to RM547mil, beating our/consensus estimates by 6-7%,” it said.
The 7% year-on-year decline in 2016 earnings was due to higher minority interest post the listing of SCG in Jul 2015. Sunway has declared a second interim cash dividend per share of 4sen and share dividend distribution of one treasury share for every 100 Sunway shares held, translating into a total dividend per share of 12.1sen for 2016 – above expectations.
Sunway’s effective unbilled sales were RM1.1bil in end-2016 (1.9x FY17F property revenue).
Elsewhere, Sunway’s construction subsidiary, Sunway Construction’s job wins of RM2.6bil in 2016 will support group earnings growth moving into 2017.
In view of the current challenging property market, Sunway expects effective sales growth to be flat at RM900mil in 2017.
“We lower our 2017/18 earnings forecasts by 7%/20%. Our revalued net asset valuation (RNAV)-target price is trimmed to RM3.26 (-10sen) on an unchanged 40% discount to RM5.61 RNAV. Maintain hold,” Maybank said.
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