Sunway sees demand intact


“We are optimistic because demand is still there. However, we still need to remain cautious as there are still uncontrollable elements to be careful of,” Sunway property division managing director Sarena Cheah said at Sunway’s business update and media briefing for 2022 yesterday.

PETALING JAYA: Property developer Sunway Bhd, which achieved record sales of RM2.55bil last year, has set a conservative target of RM2.2bil for 2022 as the group is cautiously optimistic of its prospects ahead.

While the group is confident of achieving its target for the year, Sunway property division managing director Sarena Cheah said the company still needs to be prepared for potential uncertainties that may impact the property market on both the local and foreign fronts.

“We are optimistic because demand is still there. However, we still need to remain cautious as there are still uncontrollable elements to be careful of,” she said at Sunway’s business update and media briefing for 2022 yesterday.

The developer, which also set a sales target of RM2.2bil in 2021, launched RM3.2bil worth of properties last year.

Commenting on sales drivers for 2022, Cheah said the company will focus on launching products with good value for money in favourable locations. “We plan to offer the right units in the right locations,” she said, adding that Sunway will be launching RM2.3bil worth of properties in 2022.

Cheah said nearly 70% of the new launches will be in Malaysia, with the rest being in Singapore and China.

On the local front, Cheah said the discontinuation of the Home Ownership Campaign (HOC) this year may initially result in slower sales. “I think there will be an immediate impact and it might be a little bit slower at the start. But the key will be inherent demand. If there is no demand, having all the campaigns is not going to help,” she said.

The government kicked off the HOC in January 2019 to address the overhang situation in the country. The campaign, which saw developers offering various discount packages and incentives, was initially intended for six months but then was extended for a year.

It generated sales totalling RM23.2bil in 2019, surpassing the government’s initial target of RM17bil.

The government reintroduced the HOC in June 2020 under the Penjana initiative to boost the property market after it was adversely affected by the Covid-19 pandemic.

The campaign, which finally ended on Dec 31, 2021, has been seen by many as an effective buffer against the adverse effects of the pandemic.

Many property developers that registered record sales during the pandemic attributed their performance to the HOC.

For Sunway’s launches within the Klang Valley this year, Cheah said the developer will be launching the first tower of serviced apartments in Jernih Residence in Kajang, which will have a gross development value (GDV) of RM281mil.

The developer will also be launching a condominium and superlink units in Sunway Alishan in Kuala Lumpur (with a GDV of RM261mil) and the first tower of serviced apartments in Bukit Jalil (which will have a GDV of RM275mil).

Cheah said Sunway is confident of achieving good take-ups for the units, despite the oversupply of high-rise buildings in Malaysia.

“Within the central region, we have plenty of high-rise units but we have no completed stock that is unsold.

“It’s essentially about being able to provide a good product,” she said.

Meanwhile, in Penang, Sunway will launch townhouses in Sunway Wellesley (GDV: RM120mil) and condominium units in Sunway Dora (GDV: RM71mil).

Cheah said the developer will also continue to construct Sunway Medical Centre Seberang Jaya and expand Sunway Carnival Mall.

In Ipoh, Perak, Cheah said the company will launch townhouses in Sunway City Ipoh (GDV: RM75mil).

In total, Cheah said Sunway has allocated RM2bil to be invested in Sunway City Ipoh, which will include the development of a medical centre, a shopping mall with a net lettable area of 700,000 sq ft and infrastructure upgrades, together with the state government.

Besides launching landed linked homes with GDV of RM213mil in Sunway City Iskandar Puteri, Johor, the developer will also launch semi-detached homes and bungalows in Sunway Lenang Heights (GDV: RM93mil).

Additionally, the group will commence construction for the Sunway Medical Centre Kota Bharu, Kelantan, which will anchor its wellness hub.

For the group’s international markets, Cheah said Sunway will launch private condominiums at Flynn Park (GDV: RM698mil) in Singapore, and Sunway Gardens in Tianjin, China (GDV: RM276mil).

With the acquisition of 20 acres of new land in 2021 with a potential GDV of RM4bil, Sunway’s landbank currently stands at 3,334 acres. Its unbilled sales stands at RM4bil, which will provide earnings visibility for the next three years.

With regards to Sunway record-breaking sales last year, Cheah attributed the stellar performance to good sales in Singapore.

Cheah said Singapore contributed around 50% of the group’s total sales last year.

“For 2022, we believe that the bulk of the sales will come from the Malaysian market,” she said.

Separately, Cheah said Sunway is currently masterplanning eight integrated wellness hubs across Malaysia.

She said the hubs will be anchored by Sunway Medical Centre, with Singapore’s sovereign wealth fund GIC Pte Ltd as an investment and strategic partner.

“Sunway will invest RM2bil in capital expenditure in the next four-to-five years to build the medical centres,” Cheah said.

For its third quarter ended Sept 30, 2021, Sunway Bhd’s net profit stood at RM81.10mil on revenue of RM1.07bil.

For the nine-months period ended Sept 30, 2021, the group’s net profit surged to RM210.07mil from RM157.99mil in the previous corresponding period, while revenue jumped to RM3.05bil from RM2.56bil a year earlier.

In a filing with Bursa Malaysia on its financial performance for the nine-months cumulative period, Sunway said the better revenue was due to higher contribution from most business segments, except the property investment segment.

It added that pre-tax profit was also better due to higher profit contribution from most business segments, except the property investment, construction and quarry divisions.

MIDF Research in a report on the group’s third quarter financial performance said it is maintaining its 2021 earnings estimates for Sunway.

This, the research house said, is underpinned by the expectation that Sunway’s underperforming divisions will record stronger growth during the fourth quarter.

“Our target price of RM1.71, which was derived by using sum-of-parts valuation remains unchanged. We maintain our neutral call on Sunway, with an expected total return of 4.1%,” MIDF Research said.

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