Sunway poised to achieve its sales target

PETALING JAYA: Sunway Bhd, which is targeting sales of RM1.3bil for its property segment this year, is off to a good start following solid first quarter earnings.

Analysts are optimistic that the company’s target is achievable, with CGS CIMB Research foreseeing no immediate risk to its property division segment under the Pakatan Harapan government.

“Sunway’s property development arm is aiming for higher sales of RM1.3bil in 2018. To achieve the target, it is looking to launch RM2bil worth of residential and commercial properties, a marked increase from 2017’s RM1.1bil.”

Sunway’s net profit for its first quarter ended March 31, increased to RM121.92mil from RM106.89mil in the previous corresponding period, mainly due to higher contribution from the property investment segment.

Revenue in the first quarter rose to RM1.31bil from RM1.09bil a year earlier.

On its prospects, the company is confident that its broad range of businesses would continue to expand and prosper in the years ahead.

CGS CIMB Research said Sunway’s first quarter effective unbilled sales stood at RM811mil.

MIDF Research pointed out that the company’s first quarter earnings were broadly within expectations.

“Sunway’s core net income grew 14% year-on-year to RM121.9mil, mainly contributed by higher earnings from property investment division. Operating profit of property investment division climbed 21.1% year-on-year due to contribution from Sunway Pyramid Hotel and Sunway Velocity Mall.

“Operating profit of property development division was marginally lower by 1% year-on-year, mainly due to lower profit recognition from overseas projects.

“Unbilled sales declined marginally to RM947mil in the first quarter of 2018 from RM976mil in 2017, providing less than one-year earnings visibility to property development division.”

Affin Hwang Capital also said the company’s first quarter earnings were within expectations.

“We expect Sunway’s earnings to pick up in the coming quarters on higher contributions from the property development and construction segments (RM6.1bil outstanding order book).

“We continue to like Sunway for its integrated property development business model, complemented by its healthcare and education businesses.

“Key risks to our positive view are weaker-than-expected property sales and low construction contract wins,” it said.

Post the general election, CGS CIMB Research said it expected sentiment on contractors and property developers to be weak.

“While a likely recovery in property demand would benefit Sunway property sales, upside risk to our call revolves around the construction outlook, which would only be clearer upon completion of the review of mega projects by the newly-elected government.”