UEM Sunrise aims to be profitable this year

According to its chief executive officer Sufian Abdullah, the group has set out a three-year strategy that includes disposing of non-core assets, masterplan revisions at some of its major property projects in Johor, and refocusing its revenue stream in property development.

PETALING JAYA: UEM Sunrise Bhd aims to return to profitability this year after the Covid-19 pandemic widened the group’s losses.

The property development company has been loss-making over the last eight quarters.

According to its chief executive officer Sufian Abdullah, the group has set out a three-year strategy that includes disposing of non-core assets, masterplan revisions at some of its major property projects in Johor, and refocusing its revenue stream in property development.

“We expect UEM Sunrise to return to the black by this year driven by a combination of asset monetisation, refocusing of revenue stream, and sizeable unbilled sales for the coming years,” he told reporters after the group’s results briefing for the fourth quarter ended Dec 31, 2021 (FY21) yesterday.

Suffian said the company has earmarked RM300mil of potential assets for the disposal that include land, car parks as well as some office and residential units.

UEM Sunrise

As at Dec 31, UEM Sunrise’s unbilled sales stood at RM2.4bil and it had cash of RM900mil.

It has a total land bank of 10,624 acres of which 90% is in Johor.

When asked about UEM Sunrise’s plan for its Johor assets, Sufian said the group is looking to sell some land in the state, but will retain its land bank that has been earmarked for township development.

“We are in the process of revising our master plan in Johor to provide a sustainable revenue stream to the group, as well as to preserve and enhance the land value,” he explained.

He reckoned that the property market in the country would remain challenging especially with the end of the home ownership campaign (HOC) and volatile raw material prices.

“We do not anticipate the HOC continuing beyond December 2021. However, we understand that the key to success this year is putting out the right product while communicating the value of our products.

“We expect that the momentum will pick up again in the second half of this year,” he added.

Despite the challenges, Sufian said UEM Sunrise has targeted a higher property sales of RM1.5bil, and earmarked new property development projects of RM3.3bil in gross development value (GDV).

For FY21, UEM Sunrise’s net loss narrowed to RM214.33mil from RM277.28mil a year ago due to impairment provisions for its inventories and its assets and properties amounting to RM88mil.

Revenue increased to RM1.21bil from RM1.14bil previously on the back of higher property sales of RM1.46bil compared with RM1.13bil in FY20, which exceeded the company’s target of RM1.2bil.

CGS-CIMB Research expected UEM Sunrise to turn in a core net profit in FY22 compared with core net loss in FY20 and FY21, as business operations and ongoing projects’ progress normalises post Covid-19 lockdowns.

“We raise our FY22 and FY23 forecast earnings per share by 6% to 24% to reflect the changes in project development timelines and higher new launches,” it said in a report yesterday.

The research house pointed out that UEM Sunrise managed to launch RM550mil GDV worth of projects in FY21 compared with RM900mil in FY20 due to the delayed approval processes from the authorities.

On the volatility of raw material prices, Sufian said that UEM Sunrise has rolled out several initiatives to maintain its margin at a healthy level this year to cope with the matter and not raise its selling prices.

“It’s not so much about the increase in the raw material prices, but the volatility is the issue,” he said.