PETALING JAYA: Sunway Bhd is expected to continue recording steady earnings this year, following its stellar performance in 2019.
Kenanga Research in a report yesterday said it was raising the company’s net profit projection by 8% to RM643mil for 2020, with an earnings forecast of RM703mil for 2021.
“This is primarily to take into consideration stronger contributions from the property development and healthcare divisions, ” it said.
Similarly, MIDF Research said it is revising upwards its 2020 earnings forecast by 1.8% after factoring in the higher sales achieved last year.
“We have also introduced our earnings forecast for 2021. We have maintained our target price at RM1.72, based on a sum-of-parts valuation. While we see a stable earnings outlook for Sunway, we think that the positives have been priced it. Hence, we maintain our ‘neutral’ call on the company.”
RHB Research, meanwhile, said it is fine-tuning its 2020 and 2021 earnings forecasts, as the research house expects growth this year to slow down slightly in view of market headwinds.
“Unbilled sales remained stable at RM2.7bil compared with RM2.8bil as at the third quarter of 2019, while the outstanding construction order book stood at RM5.2bil from RM5.6bil as at the third quarter of 2019.”
Sunway’s net profit for its fourth quarter ended Dec 31,2019 rose 10.47% to RM200.31mil from RM181.24mil in the previous corresponding period, due to higher contributions from its property development, quarry and property investment segments.
Revenue during the quarter, however, declined to RM1.35bil from RM1.45bil previously, due to lower contributions from its other divisions.
For the financial year ended Dec 31,2019, net profit rose to RM766.63mil from RM645.51mil in the previous corresponding period, while revenue declined to RM4.78bil from RM5.41bil previously.
Kenanga Research said the company’s earnings were above expectations.
The robust year-on-year, full-year performance was lifted by higher pre-tax profit contributions from the property development, property investment, quarry and healthcare divisions.
This more than offset the drop in construction and trading and manufacturing.
“The strong property development performance was mainly attributable to China, which in total contributed a pre-tax profit of RM61mil in 2019 compared with RM15mil in 2018.
“Quarter-on-quarter, the core net profit of RM153.5mil came mainly on the back of higher contributions from property development, property investment and quarrying.”
MIDF Research, meanwhile, said Sunway’s 2019 earnings were within expectations.
“Sunway’s core net income of RM655mil came in within our and consensus expectations, making up 104% and 101% of our and consensus full-year estimates, respectively.”
RHB Research, on the other hand, said Sunway’s fourth-quarter 2019 results met its expectations, but beat consensus.
“The company’s 2019 property sales reached RM1.13bil.
“Although management set a higher sales target of RM2bil this year, we are cautious that some projects may be delayed due to concerns in the Covid-19 outbreak.
“Nevertheless, earnings from other business divisions are likely to offset the weakness from its property development.
“We expect earnings to stay resilient in the current challenging market, ” it said.
The research house said it is maintaining its target price of RM2, based on an unchanged 40% discount to a realised net asset value for the property division, with a 10% holding company discount.”
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