PETALING JAYA: Sunway Bhd
has been growing its presence in Singapore through successive land tenders.
Adding on the expansion is its latest land deal worth about RM6.7bil via a consortium, which is also viewed positively by analysts.
Sunway’s Singapore property arm 30%-owned joint venture, Gemini Residential Pte Ltd and Gemini Trustee Pte Ltd, have been awarded a 99-year leasehold land parcel at Bayshore Drive, Singapore, by the Urban Redevelopment Authority for S$2.1bil.
Sunway MCL is the Singapore property arm.
The consortium has placed the top bid of S$1,323 per sq ft per plot ratio, which is 5.8% above the second-highest bid.
The site has direct integration with the Bedok South MRT station on the Thomson-East Coast Line and a new bus interchange.
The land has been earmarked for a mixed-use residential and commercial development. This includes a retail mall spanning 22,100 sq m in gross floor area.
Hong Leong Investment Bank (HLIB) Research said the land acquisition was positive for Sunway and the consortium, given the accretive pricing.
Meanwhile, demand prospects are also supported by its integration with a MRT station and retail components.
“The retail component would mark Sunway MCL’s first Singapore property investment asset in Singapore.”
HLIB Research also noted that the project is expected to yield RM83.2mil in net profit per annum from financial year 2028 (FY28) to FY31.
This is based on the residential gross development value (GDV) of S$3.5bil and a net margin of 10% with a development period of four years.
“For perspective, this represents approximately 5.4% of our FY28 earnings forecast.
“We maintain our forecasts for now, as contribution in FY28 is expected to be minimal, as the project will still be at an early stage of development following its targeted launch in early-2028,” it said.
Meanwhile, MBSB Research expects the project to result in a higher net gearing for Sunway. Assuming the land tender consideration be funded via internally generated funds and bank borrowings, the research house estimates net gearing of Sunway to increase to 0.41 times from 0.32 times in the first quarter of FY26.
“Including the previously awarded River Valley Green site, net gearing is expected to climb to 0.47 times.”
MBSB Research retains a “neutral” view on Sunway, but slightly raised the target price to RM5.36 from RM5.28 per share.
“While Sunway’s expanding presence in Singapore reinforces its long-term growth prospects, we continue to see limited near-term catalysts to drive a meaningful re-rating of the stock.”
Kenanga Research, on the other hand, upgraded its rating to “outperform”, reflecting an upgrade on valuation.
Target price was also raised to RM5.78.
The research house foresees that a usual 12% pre-tax profit margin is achievable for this project, and over the life the development to rake in about RM340mil for the 30% stake.
