KUALA LUMPUR: UEM Sunrise Bhd is nearly doubling its sales forecast to RM2bil for this year, as it anticipates the sluggish property market to improve by the second half of this year.
The company chalked up sales of RM1.1bil last year. Chief executive officer and managing director Anwar Syahrin Abdul Ajib said property transactions have already bottomed out and is expected to get better, going forward.
“We expect to launch a major chunk of our projects in the third quarter of this year, ” he told a media briefing here yesterday, adding that UEM Sunrise’s launches would comprise mainly mid-market landed units.
AmResearch, in a report said, UEM Sunrise’s outlook for the year remains stable, premised on its unbilled sales of RM1.8bil.
The research house added that the company’s 2020 and 2021 earnings wouldbe mainly supported by its Kiara Bay development in Kuala Lumpur, as well as its completed Australian projects.
“The completion of the Australian projects has also reduced the company’s net gearing from to 32% as at 2019 from 51% year-on-year, ” it said.
CGS-CIMB Research said UEM Sunrise’s 2020 sales target is achievable, given the more aggressive launches and ongoing monetisation of its inventory that currently stands at RM689.5mil.
“Its line-up of new launches include Senadi Hills Iskandar Puteri, Allevia Mont’ Kiara, Solaris Parq Plot B Mont’ Kiara, and Equine 9 Seri Kembangan.”
For the fourth quarter ended Dec 31,2019, UEM Sunrise’s net profit jumped to RM126.25mil from RM19.75mil in the previous corresponding period, largely due to gain from divestment.
Revenue during the quarter rose to RM1.16bil from RM752.79mil a year earlier.
Earnings per share was 2.78 sen compared with 0.44 sen previously.
For the financial year ended Dec 31, the company’s net profit dropped to RM223.80mil from RM279.99mil in the previous corresponding period, while revenue rose to RM2.91bil from RM2.04bil previously.
CGS-CIMB said UEM Sunrise’s core net profit beat expectations.
“The outperformance was due to higher-than-expected revenue recognition from Australian projects. Its 2019 core earnings surged from RM59mil to RM256mil on stronger revenue, due to the higher settlement of Aurora Melbourne Central.”
AllianceDBS Research pointed out that the company’s net gearing stood at 30% as at the end of 2019, which is also the healthiest in recent years due to the completion of its Australian projects.
“Meanwhile, the conclusion of the divestment of RM355mil Aurora Melbourne Central serviced apartment by the second quarter of 2020 will help to further improve its financial position.”
The research house however added that unbilled sales continued its downtrend to the lowest in recent years at RM1.86bil as at end-2019, of which 30% came from its Australian projects.
“This is expected to deteriorate further in the first half of 2020 as most of its unbilled sales from Australian projects will be progressively settled. Therefore, strong sales replenishment for its Malaysian projects is critical to sustain its earnings momentum going forward.
“We maintain our 2020 sales assumption of RM1bil (excluding land sales) at this juncture, ” it said.