PETALING JAYA: UEM Sunrise Bhd
has received a shot in the arm with the recent acquisition of a parcel of land in Kelana Jaya in Selangor from the Employees Provident Fund (EPF).
Analysts covering the company are bullish on the acquisition for its strategic location and fair pricing, adding that it could boost the property developer’s earnings from financial year 2026 (FY26) onwards despite some initial hike in its net gearing ratio.
Maybank Investment Bank Research (Maybank IB) was positive on this latest land acquisition by UEM Sunrise for its fair pricing and great location.
The research house noted the land was strategically located in the mature neighbourhood of SS6 Kelana Jaya and was close to SS6 retail hubs and Paradigm Mall, as well as Taman Bandaran Kelana Jaya park, offering good development potential.
The land would be re-developed into a mixed development with an estimated gross development value (GDV) of RM1.1bil.
The project, which is slated to be launched by 2025, would be categorised in the NEST Series, focusing on multigenerational-oriented homes.
On Tuesday, UEM Sunrise informed Bursa Malaysia that it would be acquiring the 3.7-ha plot of freehold land from the EPF near the Damansara-Puchong Expressway in Kelana Jaya for RM155mil.
“Assuming a pre-tax margin of 15% and development period of five years, the project is expected to churn out an annual net profit of RM30mil or 0.6 sen earnings per share (EPS) from FY26 onwards.
“Post-land acquisition, net gearing will increase to 0.5 times from 0.48 times at the end of the first quarter (1Q23).
“However, there are several risk factors to our earnings estimates, price target and rating for UEM Sunrise. This includes slower-than-expected property sales and a longer-than-expected downturn in the property sector, delay in obtaining approvals for its projects, and higher-than-expected land and asset sales,” Maybank IB noted.
Sharing a similar view, Hong Leong Investment Bank Research was also positive on the acquisition as it came with a fair acquisition price with cost-to-GDV ratio of 14.1%, apart from the strategic location of the land, and the quick turnaround with launch targeted in 2025.
“Post-acquisition, the group’s net gearing will increase to 48.1% from 45.9% as at 1Q23. We are maintaining a ‘hold’ call on the stock with an unchanged target price of 28 sen a share based on an 85% discount to our estimated revalued net asset value of RM1.90 a share,” it added.
