Maybank Investment maintains Hold on Sunway, fine-tunes earnings forecast

KUALA LUMPUR: Sunway Bhd's H1FY17 net profit came in within expectations, says Maybank Investment Research but its six-month locked in property sales of RM339mil fell short due to the lack of new launches. 

Construction job wins, however, are on track to meet its 2017 target of RM2bil.

Excluding RM57mil fair value gain from the revaluation of SunREIT's properties, Sunway reported a core net profit of RM140mil, which was 17% higher on-year and lifted H1FY17 core net profit 5% on-year to RM248mil. This accounted for 46% of Maybank Investment Research's and consensus full-year estimates.

The research house notes that Sunway's results are seasonally stronger in the second half of the year. 

It adds that Sunway's declared dividend of seven sen per share is above its expectation.

Sunway's effective property sales of RM339mil meets just 38% of its 2017 target of RM900mil, which is below expectations owing to the lack of new launches.

"Property sales should however pick up in H2FY17 with most of the new launches such as Sunway Industrial Park (RM100mil) and Sunway Kelana Jaya (RM400mil) to be by June 2017/H2 2017.

"Effective unbilled sales stood at MYR908mil at end June 2016, 1.6x our FY17F revenue forecast. Elsewhere, 54%-owned SCG’s year-to-date job wins were RM991mil – on track to meet its RM2bil target," it said.

Year to date wins have lifted its outstanding orderbook to MYR4.3bil. 

Maybank Investment Research has fine-tuned its FY17/18/19 earnings forecasts by -0.9%/+0.9%/+0.8% to factor in a higher dividend payout ratio of 45%, up from 30%. 

"Our RNAV/share estimate is largely intact at MYR5.78 (+1sen). Unlike the other bigcap developers, Sunway has a more diversified earnings base with a 54.4% stake in SCG and 37.3% in SunREIT. Our TP is based on an unchanged 0.7x P/RNAV peg," it said.