KUALA LUMPUR: Kenanga Research said it is encouraged by Sunway Bhd
's disposal of its 30% equity stake in Hoi Hup Sunway Novena Pte Ltd for S$39.9mil to realise the investment for working capital.
In an announcement yesterday, Sunway said it was selling its equity interest in the company to Hoi Hup Realty Pte Ltd to cash out on the development which was completed in 2017 and apply the proceeds to its other projects in Singapore.
"While the disposal is expected to incur a marginal loss of c.SGD100.0k as it is lower compared to the net book value of SGD40.0m (original investment cost of SGD300.0k + share of profit of SGD39.7m), SUNWAY is still entitled for additional compensation should HHSN is able to dispose the remaining unsold medical units at a higher price which exceeds its 5% margin in 30 months," said Kenanga.
The research house believes the Sunway management will continue with its planned launches of RM2bil despite the change in government, maintaining a sales target of RM1.3bil which it believes to be achievable should it launch most of its new projects before 3Q18.
It added that unbilled sales of RM900,000 with one-year visibility and a vigorous outstanding orderbook of RM6.3bil provide two to three years' visibility while other divisions are generating decent growth except for quarry operations.
Kenanga maintained market perform on the counter with an unchanged target price of RM1.60.
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