Sunway shares hit all-time high

KUALA LUMPUR: Shares of Sunway Bhd hit an all-time high in early trade Tuesday after the company announced a land sale in Sunway City Iskandar Puteri (SCIP), Johor for over RM380mil.

The counter rose 3.13%, or 12 sen to RM3.95. Year-to-date, it has risen over 83%.

Sunway Group said it sealed a deal worth more than RM380mil, with Equalbase Pte Ltd acquiring two parcels of land spanning 64 acres in SCIP for the development of data centres.

It said the latest investment by Equalbase builds upon Equalbase Sunway 103°, a Sunway and Equalbase Group joint venture sitting on a Free Commercial Zone with a gross development value (GDV) of RM8bil for the carbon-neutral logistics hub in SCIP, Johor.

Kenanga Research estimated that the sale would result in a gain of RM324mil (or 5.7sen per share).

At RM136 psf, Kenanga believes the deal was priced fairly with asking prices for Iskandar Puteri data centre land ranging between RM135 psf to RM140 psf.

“Based on our back-of-the-envelope calculations, at a book value of the land of c.RM55.4mil (RM866k/acre or RM20 psf) in CY12, we estimate

the gain to be at RM324mil (or 5.7sen/share).

“Nonetheless, the RM380mil proceeds will have little impact on its net debt and gearing of RM7.6bil and 0.5x, respectively,” the research house said.

Kenanga Research has maintained its forecasts on Sunway but raised the target price by 8% to RM2.66 (from RM2.47). It maintained “underperform” on the counter given its rich valuations

“We like Sunway for having an eye for good land parcels, enabling it to execute quick turnaround for its property projects; it growing private healthy business backed by a pipeline of new medical centres within brown field townships; a diversified range of investment assets that provides recurring incomes, and a trusted Sunway brand,” it added.