PETALING JAYA: Analysts expect minimal near-term earnings impact from UEM Sunrise Bhd
’s One Oval project in Perth, Australia, given the build-then-sell model for developments there.
These developments typically result in backloaded profit recognition, said CGS International (CGSI) Research.
It is optimistic about the project and expects a lumpy profit recognition of RM81mil to RM108mil in financial year 2029 (FY29), assuming the units are fully sold by then.
UEM Sunrise is currently in advanced negotiations to conclude an en-bloc sale of 41 affordable units within the North Tower to a community housing provider.
The deal, expected to be finalised in the coming quarters, would secure sales for roughly 12% of total units, with an estimated value of RM80mil to RM110mil, based on back-of-the-envelope calculations.
This would represent 6% to 8% of the project’s gross development value of RM1.35bil, and would increase UEM Sunrise’s unbilled sales (RM3bil as at the end of the second quarter of 2025) by 3% to 4%.
CGSI Research reiterated its “hold” call on the stock, noting that the subdued earnings outlook for FY25 to FY27 and current rich valuations may limit near-term upside potential. It kept its target price at 76 sen a share, based on a 60% discount to its revalued net asset value per share of RM1.91.
The company is currently trading at a fair 0.5 times FY25 price-to-book value, below the sector average of 0.7 times, which it attributes to its sizeable landbank.
Downside risks include poor earnings delivery and sluggish project take-up rates, while the upside potential comes from monetisation of its landbank and higher take-up rates of existing projects.
