Sunway’s purchase prices for Kajang, USJ 1 deemed a fair move
KUALA LUMPUR: Sunway Bhd’s (Sunway) purchase prices for two land deals in Kajang and USJ 1 have been deemed fair by analysts.
According to Kenanga Investment Bank Bhd (Kenanga Research), Sunway has to date entered into four land deals, bringing the group’s year-to-date gross development value (GDV) replenishment up to RM5 billion with its existing GDV now stands at RM53.5 billion.
Kenanga Research deemed that the purchase price for both of Sunway’s landbank to be fair as it represents a land cost to GDV ratio of 13 per cent and 11 per cent for Kajang and USJ 1, respectively.
“In terms of pricing per square feet (psf), the asking price for the surrounding land around its Kajang land ranges between RM210psf to RM250psf, which is close to their purchase price given that it comes with a completed structure with car park podium that is viable to be converted into SOHOs, coupled that it is a Transit Oriented Development,” the research arm noted.
“That said, it allows Sunway to enjoy a speedier billings cycle upon launch.”
AmInvestment Bank Bhd (AmInvestment Bank) also believed that the purchase price for the Kajang land, which translates into RM274psf, is fair based on the market value of land surrounding the area.
The research firm believed the acquisition will be positive to Sunway’s long-term outlook.
“With the land located less than two kilometres (km) from Kajang town and next to the Sg Jernih MRT station, the proposed development will be another transit-oriented development for the group,” it said.
As for Sunway’s USJ 1 land, Kenanga Research believed that Sunway secured a good bargain from JAKS Resources Bhd (JAKS) as RM260psf for an industrial land.
The research arm believed Sunway would be able to convert the land for commercial purposes at a lower rate as compared to the asking prices for the surrounding area.
It noted that the asking price in the surrounding area ranges between RM330psf to RM380psf for commercial land.
“Furthermore, it is located just a throw stone away from local amenities and public transport like Da Men Mall, Summit USJ, and South Quay BRT station.”
AmInvestment Bank also deemed the purchase price for the USJ 1 land, which translates into RM260psf, as fair based on comparable industrial land transactions around the area.
In the long run, the research firm believed this acquisition will provide valuable landbank for Sunway’s property development division as it is close enough to Sunway City to be an extension of the group’s township.
Overall, while Sunway has already replenished GDV of RM5 billion for the year, Kenanga Research believed that there could be more landbanking deals in the pipeline.
“In terms of earnings delivery, we remain confident with Sunway’s ability to deliver for the year premised on its strong unbilled sales of RM1.4 billion with two-year visibility, a robust outstanding order book of RM4.6 billion that provides two to three years visibility and other divisions that has been generating decent growth over the years.”