Maybank Research retains Buy on Sunway, neutral on Singapore JV

Maybank Investment Bank Research is neutral on Sunway

KUALA LUMPUR: Maybank Investment Bank Research is neutral on Sunway’s latest joint venture with Hoi Hup in Singapore pending further details.

It said on Monday the 30%-owned redevelopment project, which will start contributing to Sunway‘s bottomline from 2019 onwards, could enhance its realised net asset value (RNAV) a share marginally by  one sen. 

“We maintain our earnings forecasts and RNAV target price of RM1.97 (on 0.75 times price to RNAV). Reiterate Buy,” it said.

Last Thursday,  Sunway and its JV partner have entered into a share price agreement with the collective majority owners of Brookvale Park to acquire Brookvale Park (in Singapore) for S$530mil cash or S$932 psf (including an estimated development charge of S$26mil, Maybank Research said, based on global real estate services firm JLL).

Sunway will take a 30% stake in this project, with the remaining to be split between Hoi Hup (60%) and S C Wong Pte Ltd (10%). 

Maybank Research said a news report stated more than 80% of the owners have consented to the sale, whichis subject to several conditions being met, including an order of sale by the Strata Titles Board and the Court.

According to JLL, Brookvale Park is a 999-year leasehold development in District 21, Clementi. It was completed in 1983 and comprises 160 units of private residential apartment. The site is a short drive away from Holland Village, Bukit Timah Nature Reserve and near to tertiary and international education institutions.

Upon completion of the acquisition, Brookvale Park will be redeveloped into a new residential development with an allowed plot ratio of 1.6 times, translating into a total gross floor area of 656,494 sq.ft.


Maybank Research said no further details such as gross development value (GDV), launch date were available as yet. 

However,  based on the asking sale prices of S$1,100 to S$1,800 psf from the nearby projects within District 21, we estimate the project’s GDV to be S$985mil (assuming S$1,500 psf; RM2.9bil). 

“Assuming a pretax margin of 12% spanning over four years of development period, the new project could enhance our RNAV a share estimate by one sen to RM2.64,” it said.