MIDF maintains 'neutral' on UEM Sunrise


KUALA LUMPUR: UEM Sunrise Bhd's subsidiary's Cheras land acquisition from Accolade Land Sdn Bhd is expected to increase the group's presence in the Klang Valley although there is will be limited earnings impact in the near term.

MIDF Research said in a note that it is positive on the land purchase, which is strategically located next to the Taman Connaught MRT station in Cheras.

UEM Sunrise is exploring a Transit Oriented Development (TOD) on the land which aimed at young homeowners.

Preliminary plans on the land is to develop 1.8m sf of various types of competitively priced products with an estimated GDV of

RM1b.

Meanwhile, land cost to GDV is deemed attractive at 19.7%.

MIDF maintained its earnings forecast for FY21/22 as the project is expected to kick off in 2H22.

It also expects minimal impact on the balance sheet post-land acquisition with net gearing estimated to climbe to 0.54x from 0.51x in the event UEM Sunrise funded the acquisition via bank borrowings.

"Maintain NEUTRAL with an unchanged TP of RM0.42. RNAV impact from the land acquisition is estimated at <1%.

"Hence, we maintain our TP for UEM Sunrise at RM0.42, based on 80% discount to RNAV," said MIDF.

It added that the neutral rating was owing to weaker near-term earnings visibility and limited upside.
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