HLIB Research maintains ‘buy’ call on Sunway

KUALA LUMPUR: Hong Leong Investment Bank (HLIB) Research has maintained a “buy” call on Sunway Bhd with a target price of RM5.14, following the company’s joint venture (JV) with Huatland Development Sdn Bhd to acquire 1.75 hectares in Wangsa Maju, Kuala Lumpur, for RM51.1 million.

In a research note yesterday, HLIB said the land would be used for a mixed development project, comprising serviced apartments and lifestyle retail units with a combined gross development value (GDV) of RM500 million.

Targeted for launch in the second half of 2018, the project would be developed over a five-year period.

The research firm estimates that Sunway’s 55 per cent stake in the JV would add another RM275 million to the group’s effective GDV, increasing it by 0.8 per cent to RM36.2 billion, and the total GDV would grow 0.9 per cent to RM54 billion.

“We are mildly positive on the above realisable net asset value accretive acquisition, given the continued expansion in the group’s landbank at a competitive land cost. The proposed development allows Sunway to venture into the more affordable segment with average selling pricing of RM550,000.

“Sunway is our top pick within the sector, as we believe it should be rerated and traded closer to its peers such as IJM and Gamuda. This is also given its diversified income stream and declassification from the property sector,” HLIB said.

As at 11.41 am, Sunway’s share price was three sen better at RM4.18 with 610,300 shares traded. — Bernama