Replenishes Klang Valley Landbank

Transcription

1 Sunway Berhad Replenishes Klang Valley Landbank By Adrian Ng l adrian.ng@kenanga.com.my News Comments Last Friday, SUNWAY made two separate announcements on land acquisitions;(i) freehold industrial land in Kelana Jaya from Tamura Electronics (M) SdnBhd for a total consideration of RM35.8m or RM169.95psf, and (ii) two parcels of leasehold land measuring 2.25 acres and 2.0 acres in Kampung Baru Subang from View2Pick SdnBhd (V2P) and Chen Yew Plastics Sdn Bhd for RM9.0m (RM91.83psf) and RM11.2m (RM128.85psf), respectively. However, these two parcels of land would be acquired through the joint-venture set up by SUNWAY with V2P on a 80:20 basis, whereby SUNWAY would inject its land measuring 2.1 acres for industrial park development purposes, upon the completion of the amalgamation of the three parcels of land. SUNWAY s move in acquiring more land banks is not surprising. In fact, we had been anticipating developers to be more active in landbanking activities since our sector report dated 6/4/15. In 2016, SUNWAY would be the first developer in making a landbanking move with the several parcels of land to be acquired as mentioned above. On a land cost to GDV perspective, both Kelana Jaya and Kampung Baru Subang land acquisition cost makes up 35.8% and 29.8% of the prospective GDVs of RM100.0m and RM110.0m, respectively. While it is slightly higher than our usual comfortable land cost to GDV threshold of 20%, we deem the land acquisition costs as still fair given their industrial purposes. Furthermore, it is still comparable with the surrounding bid prices from nearby industrial parks RM137.99psf (Sungai Penaga) to RM400.0psf (Hicom-Glenmarie), while Kampung Baru Subang bid prices ranges between RM94.06psf - RM126.26/psf. Outlook SUNWAY is expected to release its FY15 results on 26/2/16. Judging from its 9M15 sales performance of RM734.0m, we believe that SUNWAY should be able to meet our sales estimates of RM1.0b. Its property unbilled sales remain fairly healthy at c.rm2.3b, providing at least years of visibility and we believe that it is sustainable at that level should they are able to meet our FY15 sales estimates of RM1.0b. Forecast Rating Valuation Following the recent earnings downgrade on SUNREIT from our REIT analyst, we trimmed our FY15-16E earnings lower by 1%- 2% to RM m, and we do not expect any earnings contribution in FY15-16E from the two projects above, as the project launches are only expected in FY17. Maintain MARKET While the acquisition would add 1.0 sen to our previous SoP driven TP of RM3.27, we lowered our TP to RM3.20 after the adjustment in our valuation for SUNREIT of which our REIT analyst has downgraded to RM1.60 (previously, RM1.73). Our applied discount of 54% on its property division is close to our overall sector average discount of 53%. We also maintain our MP call on SUNWAY due to the lack of re-rating catalyst in the property division. Risks Weaker-than-expected property sales and construction orderbook replenishment. Higher-than-expected sales and administrative costs. Negative real estate policies. Tighter lending environments. MARKET Price: RM2.96 Target Price: RM3.20 Share Price Performance KLCI 1, YTD KLCI chg -1.0% YTD stock price chg -3.9% Stock Information Shariah Compliant Yes Bloomberg Ticker SWB MK Equity Market Cap (RM m) 5,268.2 Issued shares 1, week range (H) week range (L) mth avg daily vol: 1,119,470 Free Float 26% Beta 0.6 Major Shareholders SUNGEI WAY CORP SDN 55.1% YEAN TIH CHEAH 13.1% EMPLOYEES PROVIDENT 5.6% Summary Earnings Table FYE Dec (RM m) 2014A 2015E 2016E Turnover 4,842 5,093 5,043 EBIT PBT Net Profit (NP) Core NP Consensus (NP) n.a Earnings Revision n.a. -1% -2% EPS (sen) Core EPS (sen) EPS growth (%) -50% -24% -12% NDPS (sen) NTA/Share (RM) PER (x) Price/NTA (x) Net Gearing (x) Dividend Yield (%) 4.5% 11.6% 3.2% PP7004/02/2013(031762) Page 1 of 6

2 Sunway Berhad Kelana Jaya Land Details Land Area (acres) 4.84 Existing Land Use Industrial Purchase Price RM35.8m (RM169.95psf) Tenure Freehold Purchaser Sunway Dimension Stones SdnBhd Vendor Tamura Electronics (M) SdnBhd Conditions Precedent State Authority consent for sale and transfer Tenancy SDSSB and Tamura to enter into tenancy agreement for the purpose of letting the property to Tamura for 9 months from Completion Date at a total rental of RM600.0k Source: Sunway, Kenanga Research Kelana Jaya Land Location Map Source: Sunway, Google Maps,Kenanga Research Kampung BaruSubang Land Details Land Title PT7 PT8 PT2049 Vendor Sunway Dimension Stones View2Pick Chen Yew Plastics Land Area (acres) Existing Land Use Industrial Agriculture Industrial Tenure Leasehold Leasehold Leasehold Lease Expiry Renewal To apply to state authorities for extension of lease to 99 years Purchase Price RM12.5m (RM136.65psf) RM9.0m (RM91.83psf) RM11.2m (RM128.85psf) Payment Terms As and when JV Co has Cash Flow 50% upon receipt of building approval from authorities. Balance 50% one year later. 10% depositi on signing of SPA. Balance 90% upon Completion Date (all CPs met). Current Use Tenanted Vacant Tenanted Conditions Precedent (CPs) State Authority approval Discharge of all charges State approval for amalgamation and extension of lease JV Company Ekuiti Meranti SdnBhd Shareholding Sunway City SdnBhd (80%), View2Pick SdnBhd (20%) Project management fee Source: Sunway, Google Maps, Kenanga Research JVCo to pay Sunway a management fee equivalent to 1% of gross development value (GDV) of the development PP7004/02/2013(031762) Page 2 of 6

3 Sunway Berhad Kampung Baru Subang Land Location Map Source: Sunway, Kenanga Research Sum-of-Parts Stake Stake PER Discount Value Assumptions Property Development & Investment RM'm (x) (%) RM'm 100% 6,470 n.a 54% 2,976 (i) Property Dev: DCF of Future 11% WACC, 18% net margin (ii) Property Inv: Zero surplus on Book Value Sunway Reit 35% 1,620 n.a 1,620 SUNREIT TP RM1.60 Construction 56% 1, ,009 14x FY16E PER- pegged with the mid end of mid cap construction Fwd PERs of 12x-15x. Quarry & Buildings Mat 100% x FY16E PER Trading & manufacturing Group Shareholders 0 Funds Total SOP 9,554 6,060 Adjustment for Dilution 879 TP (RM) 3.20 Diluted no. of shares ('m) Source: Kenanga Research 100% x FY16E PER 2,168 PP7004/02/2013(031762) Page 3 of 6

4 Sunway Berhad Income Statement Financial Data & Ratios FY Dec (RM m) 2012A 2013A 2014A 2015E 2016E FY Dec (RM m) 2012A 2013A 2014A 2015E 2016E Revenue Growth (%) EBITDA Revenue Depreciation EBITDA EBIT EBIT Interest Expense Pre-tax Income Investing Net Income Associate/JCE Core Net Profit Exceptionals/FV PBT Profitability (%) Taxation EBITDA Margin Minority Interest EBIT Margin Net Profit PBT Margin Core Net Profit Net Margin Core Net Margin Balance Sheet Effective Tax FY Dec (RM m) 2012A 2013A 2014A 2015E 2016E ROE Fixed Assets ROA Intangibles Other FA Inventories DuPont Analysis Receivables Net margin (%) Other CA Assets turn. (x) Cash Leverage fac. (x) Total Assets ROE (%) Payables Leverage ST Borrowings Debt/Asset (x) Other ST Liability Debt/Equity (x) LT Borrowings Net Debt/(Cash) Other LT Liability Net Debt/Eq. (x) Minority Int Net Assets Valuations EPS (sen) Share Capital Core EPS Reserves NDPS (sen) Shareholders Equity BV/share (RM) Core PER (x) Cashflow Statement Net Div. Yld (%) 2.0% 3.3% 4.5% 11.6% 3.2% FY Dec (RM m) 2012A 2013A 2014A 2015E 2016E PBV (x) Operating CF , EV/EBITDA (x) Investing CF , Financing CF Net Change in Cash ,013 1, Free Cash Flow , Source: Kenanga Research Fwd PER Band Fwd PBV Band FD PBV 2-yr Average forward PBV Fwd average PBV +1SD Fwd average PBV +2SD (RM) PRICE (RM) 7.1 x 8.3 x 9.4 x 10.6 x 11.8 x Fwd average PBV -2SD Fwd average PBV +0.5SD Fwd average PBV -0.5SD Fwd average PBV +1.5SD 3.90 (x) 1.10 Fwd average PBV -1.5SD Fwd average PBV -1SD Source: Bloomberg, Kenanga Research PP7004/02/2013(031762) Page 4 of 6

5 Sunway Berhad Peer Comparison NAME Price (19/2/16) Mkt Cap PER (x) Est. NDiv. Yld. Historica l ROE P/BV Net Profit (RMm) FY15/16 NP Growth FY16/17 NP Growth Target Price Rating (RM) (RMm) FY14/15 FY15/16 FY16/17 (%) (%) (x) FY14/15 FY15/16 FY16/17 (%) (%) (RM) DEVELOPERS UNDER COVERAGE S P SETIA BHD* , % 7.1% % -17.3% 3.50 MARKET IOI PROPERTIES GROUP BHD* , % 3.9% % 1.9% 2.09 UNDER UEM SUNRISE BHD* , % 7.8% % 20.8% 1.07 MARKET SUNWAY BHD , % 13.2% % -14.3% 3.20 MARKET MAH SING GROUP BHD^ , % 16.1% % 4.7% 1.35 MARKET ECO WORLD DEVELOPMENT GROUP BHD , % 2.5% % % 1.90 OUT UOA DEVELOPMENT BHD* , % 12.2% % 7.4% 2.22 OUT MALAYSIAN RESOURCES CORP , % 2.6% % 132% 1.39 MARKET BHD KSL HOLDINGS BHD , % 15.3% % 1.8% 1.72 OUT MATRIX CONCEPTS HOLDINGS , % 29.5% % -18.2% 2.46 MARKET BHD CRESCENDO CORPORATION BHD* % 15.3% % 6.3% 1.74 UNDER HUA YANG BHD % 25.9% % -4.9% 2.20 OUT CONSENSUS NUMBERS IGB CORPORATION BHD , % 5.1% % 10.9% 4.10 NEUTRAL YNH PROPERTY BHD % 1.5% % 28.1% 1.83 NEUTRAL GLOMAC BHD % 9.8% % 10.2% 1.03 BUY PARAMOUNT CORP BHD % 7.3% % 5.6% 2.40 BUY TAMBUN INDAH LAND BHD % 24.0% % -0.9% 1.60 BUY * Core NP and Core PER ** Crescendo per share data is based on non-fully Diluted ^ Last price and TP is Ex-rights and Ex-Bonus. Source: Kenanga Research PP7004/02/2013(031762) Page 5 of 6

6 MRCB Stock Ratings are defined as follows: Stock Recommendations OUT :A particular stock s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). MARKET :A particular stock s Expected Total Return is WITHIN the range of 3% to 10%. UNDER :A particular stock s Expected Total Return is LESS than 3% (an approximation to the 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). Sector Recommendations*** OVERWEIGHT :A particular sector s Expected Total Return is MORE than 10% (an approximation to the 5-year annualised Total Return of FBMKLCI of 10.2%). NEUTRAL :A particular sector s Expected Total Return is WITHIN the range of 3% to 10%. UNDERWEIGHT :A particular sector s Expected Total Return is LESS than 3% (an approximation tothe 12-month Fixed Deposit Rate of 3.15% as a proxy to Risk-Free Rate). ***Sector recommendations are defined based on market capitalisation weighted average expected total return for stocks under our coverage. This document has been prepared for general circulation based on information obtained from sources believed to be reliable but we do not make any representations as to its accuracy or completeness. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may read this document. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees. Kenanga Investment Bank Berhad accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or any solicitations of an offer to buy or sell any securities. Kenanga Investment Bank Berhad and its associates, their directors, and/or employees may have positions in, and may effect transactions in securities mentioned herein from time to time in the open market or otherwise, and may receive brokerage fees or act as principal or agent in dealings with respect to these companies. Published and printed by: KENANGA INVESTMENT BANK BERHAD (15678-H) 8th Floor, Kenanga International, Jalan Sultan Ismail, Kuala Lumpur, Malaysia Telephone: (603) Facsimile: (603) Website: Chan Ken Yew Head of Research PP7004/02/2013(031762) Page 6 of 6