Maybank Investment Research maintains Hold on Sunway Reit

  • Analyst Reports
  • Tuesday, 21 Jun 2016

PETALING JAYA: Maybank Investment Research is positive on Sunway Reit's proposed acquisition of a vacant land from Sunway Bhd which could pave the way for Sunway Carnival Mall’s expansion in the near future. 

"We also believe that the purchase price is fair based on the district’s average asking price," it said in a note on Tuesday.

However, the research house's target price of RM1.50 and forecasts are unchanged at this juncture, pending Securities Commission’s approval and further details on the planned extension. 

Maybank has maintained its Hold rating on the stock.

"We remain positive on Sunway Carnival Mall’s outlook whereby the mall has sustained double-digit rental reversions and a commendable occupancy rate of 93.8%. 

"We forecast a 9.2% contribution to Sunway Reits’s financial year 2017 revenue," it added.

Sunway Reit has proposed to acquire a 3.3-acre vacant land in Seberang Perai Tengah, Penang for RM17.2mil in cash from Commercial Parade Sdn Bhd, a wholly-owned subsidiary of Sunway City (Penang) Sdn Bhd which in turn is a 100%- subsidiary of Sunway Bhd. 

The deal will be fully funded via debt. 

Given a successful acquisition, it would enable Sunway Reit to expand and increase the NLA of Sunway Carnival Mall in the near future.

"The purchase price translates into RM120 psf and we believe it is fair as the average asking prices for vacant land within the Seberang Perai Tengah district range about RM70-RM150 psf, based on our findings," it said.

However, Maybank said the land purchase is subject to the Securities Commission’s approval for the waiver of selected clauses within Securities Commission’s Reit Guidelines which forbid local Reits to engage in property development and acquire vacant land.

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