Sunway’s FY17 flattish sales target likely due to cautious sentiment on property sector — MIDF Research
KUCHING: Sunway Bhd’s ( Sunway) financial year 2017 (FY17) flattish sales target is likely due to the cautious sentiment on the property sector.
According to the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research), Sunway had set its sales target for FY17 at RM1.1 billion on the back of targetted property launches of RM2 billion.
“For FY17, management plans to launch property projects in several regions namely South Quay, Kelana Jaya, Penang, Johor, and China,” the research arm said in a corporate update.
The RM1.1 billion sales target for FY17 impliea flattish yoy property sales for Sunway as management is confident of hitting sales target of RM1.1 billion for FY16, the firm said. It further said the bulk of Sunway’s property sales in FY16 were from the group’s projects in Klang Valley and Johor.
Sunway’s management sales target of RM1.1 billion was lower than MIDF Research’s in-house sales target of RM1.3 billion for FY17.
“We think that the flattish sales target set by management was due to the cautious sentiment on the property sector despite projects with massive gross development value (GDV) of RM2 billion will be launched in FY17,” it said.
Correspondingly, the research arm revised its FY17 sales target for Sunway to RM1.1 billion from RM1.3 billion, in line with management sales target.
Following the downward revision in sales target for FY17, MIDF Research’s earnings forecast for FY17 was nudged down marginally by 0.4 per cent.
“Overall, earnings impact is minimal as earnings contribution from property sales in FY17 is expected to be minimal due to low progress billing,” it said.
Meanwhile, the research arm maintained its earnings forecast for FY16 and introduced its earnings forecast for FY18.
MIDF Research also maintained ‘neutral’ on Sunway with an unchanged target price of RM3.25 per share.
“Outlook for Sunway remains neutral given the lack of catalyst and also due to the subdued outlook for property market,” it said.