KUALA LUMPUR: Maybank Investment Bank Research (Maybank IB) has upgraded UEM Sunrise to a “buy” after the recent decline in its share price while it expects the property developer’s earnings to pick up strongly.
The research house said during its recent site visit that it was impressed by UEM Sunrise’s Melbourne projects - Aurora and Conservatory, for their strategic locations.
“We expect low settlement risk especially for the Aurora project and hence we are keeping our earnings forecasts and 96 sen RNAV-TP (on 0.4 times P/RNAV) unchanged for now.
“The company’s share price has fallen 18% since its April peak and it now presents an upside potential of 20%,” it said.
It last traded price was 80 sen.
Maybank IB said it was more confident in UEM Sunrise’ Melbourne projects post the recent site visit and expect low settlement risk especially for the Aurora project.
One of the tallest buildings in Melbourne, the Aurora tower is strategically located at Latrobe Street and directly linked to Melbourne Central railway station and shopping via an underground tunnel.
The settlement rate for SP3 and SP4 has been strong at 97% while the remaining units in SP5 will be handed over in Sep 2019.
As for Conservatory, the settlement rate is also decent at 75% as at the end of June of this year.
It said UEM Sunrise will start the construction for its other Melbourne project at St Kilda – Mayfair, once the project hits a 60% take-up rate. Catering to the high-end market, the project is currently 40% sold since its launch in 2017.
To improve the take-up rate, UEM Sunrise has appointed a third party marketing agency to market Mayfair.
“We expect to see a reduction in shareholding by Khazanah in UEM Sunrise, paving the way for new shareholder.
“Khazanah has been actively reducing its stakes in companies such as IHH Healthcare (buy/RM6.80), which are placed in its commercial pool of assets which are up for divestment at the right price.
“This includes UEM Sunrise in which Khazanah owns a 66% stake,” it said.