HLIB likes Sun­way REIT for its well-di­ver­si­fied port­fo­lio

New Straits Times - - Business -

KUALA LUMPUR: Sun­way Real Es­tate In­vest­ment Trust (Sun­way REIT) will put fo­cus on yield ac­cre­tive as­sets to fur­ther di­ver­sify and grow its port­fo­lio as rental re­ver­sion has slowed since last year.

Hong Leong In­vest­ment Bank (HLIB) said po­ten­tial in­jec­tions from spon­sors in­cluded Pyra­mid Phase 3 and the Pin­na­cle, where Sun­way REIT had the right of first re­fusal, was more straight for­ward com­pared with the first right to match for Sun­way Giza and Sun­way Ve­loc­ity, that were owned by joint-ven­ture ve­hi­cle.

How­ever, HLIB said Sun­way Pu­tra Mall re­mained chal­leng­ing as re­bates was given out to some ten­ants as sales were not com­men­su­rate with a healthy foot­fall.

“How­ever, we still ex­pect a year-on-year growth for Sun­way Pu­tra Mall due to low base from the free-rent pe­riod back in the first quar­ter of last year.

“We un­der­stand that Park­son will be com­ing in to be the crowd puller an­chor ten­ant and ex­pect Pu­tra Mall to fare bet­ter only in next year, which is usu­ally the case post first cy­cle of lease term.”

HLIB said Sun­way REIT was still guid­ing a dip in dis­tri­bu­tion per unit for this fi­nan­cial year due to the ces­sa­tion of man­age­ment fees payable in unit and loss of in­come from Sun­way Pyra­mid Ho­tel.

“We like Sun­way REIT for its well-di­ver­si­fied port­fo­lio in which the prom­i­nent as­sets are lo­cated at its unique town­ship, large ac­qui­si­tion pipe­line and strong back­ing from spon­sor.” it said.

HLIB has main­tained its “hold” call on Sun­way REIT, with un­changed target price of RM1.70.

On con­struc­tion, HLIB is pos­i­tive on Sun­way Con­struc­tion Group Bhd’s (SunCon) re­cent job wins as it rep­re­sented the com­pany’s eight project se­cured from the Pu­tra­jaya Group.

Be­sides that, SunCon has also se­cured sub­con­tract works for Sun­gai Besi-Ulu Ke­lang El­e­vated Ex­press­way and Da­mansara–Shah Alam El­e­vated Ex­press­way even it did not man­age to par­tic­i­pate in both high­ways at the main con­trac­tor level.

HLIB said with these two jobs in the bag, SunCon’s year-to-date job wins now to­tal RM900 mil­lion, out of RM2 bil­lion tar­geted.

“We re­main more op­ti­mistic at RM2.5 bil­lion, jus­ti­fied by the strong mo­men­tum wit­nessed thus far into the year,” it said.

SunCon’s or­der book cur­rently stands at RM4.9 bil­lion, trans­lat­ing to a healthy cover ra­tio of 2.7 times on fi­nan­cial year 2016 rev­enue.

The in­vest­ment bank has main­tained its “buy” call on SunCon, rais­ing its target price to RM2 from RM1.84.

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