SUNWAY BHD

By Maybank Investment Bank Research Hold Target price: RM4.03

MAYBANK Investment Bank Research (Maybank IB) is positive on Sunway’s latest land purchases in Kajang and Subang for their strategic locations.

The research house said while the four parcels of industrial land in Subang will only be developed in the later years, the Kajang project should start contributing to earnings from 2019 onwards.

“We are positive on the latest land acquisitions for their strategic locations. The land costs, which account for 12%-14% of the gross development value (GDV), are fair.

“The two projects are expected to enhance our realisable net asset value by four sen. Post the land acquisition, Sunway will have a total land bank of 3,325 acres with an estimated effective GDV of RM35.9bil,” said the research house.

Commenting on the Kajang land, Maybank IB said a commercial development comprising a three-storey retail podium, 10-storey car park podium, a 20-storey and 12-storey commercial towers had previously been approved for development on the Kajang land.

“Construction had started but it was discontinued by the previous developer when the car park podium and both commercial blocks reached the roof top.”

The research house said it was positive on the latest land purchase in Kajang due to its strategic location.

“The land is next to the Sg Jernih MRT station. Sunway intends to continue building the semi-completed structure but will replace the original development with a transit oriented development where retail podium/commercial lots and serviced apartments/Soho will be built.”

It said the Subang land, meanwhile, would provide Sunway with immediate access to four industrial lots, which its trading and manufacturing businesses can use as warehouses and storage facilities in the immediate term.

“Sunway plans to redevelop the land into a mixed development with an estimated GDV of RM1.4bil after five years.”