KUALA LUMPUR: AmInvestment research has initiated coverage on Sime Darby Property with a hold recommendation and fair value of RM1.08 based on a 45% discount to RNAV.
In a research note today, the research house said its core net earnings estimates for SimeProp are R169mi, RM401.9mil and RM497mil for FPE18, FY19 and FY20 respectively.
AmInvestment noted that given the subdued property market, SimeProp is gearing up its strategic campaign to promote new and completed developments by offering discounts and rebates.
The developer plans to reduce the existing inventory level by 6%–10% by the end of 2018.
Meanwhile, the research house added that 80% of the residential launches will be in the middle range under RM1mil in the Greater Klang Valley to take advantage of Budget 2019 measures.
SimeProp will also be looking to dispose of its non-strategic landbank to improve cash flow.
AmInvestment said SimeProp has a balance landbank of 20,572 acres and a total estimated GDV of RM89.3bil
With regards to the sale of the commercial assets in the second phase of Battersea Power Station, AmInvestment said the transaction is expected to be completed in the first quarter of 2019. SimeProp has a 40% stake in the sale.
"Meanwhile Phase 2 residential, comprising 255 units of apartments, has a GDV of RM3.9– 4.0bil and is expected to be completed by the end of 2020. Revenue profit recognition is expected from 4QFY20 onwards. So far 90% of Phase 2 properties have been sold," it said.
Already a subscriber? Log in.
Limited time offer:
Cancel anytime. No ads. Auto-renewal. Unlimited access to the web and app. Personalised features. Members rewards.
Follow us on our official WhatsApp channel for breaking news alerts and key updates!