Sunway outlook remains positive

KUALA LUMPUR: The outlook for Sunway Bhd (Sunway) remains positive, premised on the group’s improved unbilled sales of RM3.1 billion.

AmInvestment Bank Bhd (AmInvestment Bank) gathered that during a recent engagement with the company.

“Sunway lined up several launches for the fourth quarter of financial year 2020 (4QFY20) with a combined gross development value (GDV) of RM1.66 billion,” AmInvestment Bank said.

“In the central region, it has just launched the Sunway Velocity Two (Tower C) serviced apartments (GDV RM300 million) in November.

“Meanwhile, the Sunway Belfield serviced apartments (GDV RM360 million) is set for a December launch.

“At the same time, Sunway is planning to launch the Ki Residences condominium (GDV

RM1 billion) in Singapore.”

AmInvestment Bank recapped that Sunway Velocity Two (Tower C), which was launched in November, has seen a take-up rate of 25 per cent.

The research firm noted that other projects, which were launched in the past 12 months, have also seen positive response such as the Sunway Avila Tower B (86 per cent) and Canberra Link Singapore (86 per cent).

“For the healthcare division, the expansion of Towers D, E & F of Sunway Medical Centre is expected to be completed in 1QFY22 with 400 additional beds.

“Meanwhile, the Sunway Medical Centre Seberang Jaya, Penang (200 beds) and Sunway Medical Centre Damansara, Selangor (200 beds) are scheduled for completion in 2022.”

Nevertheless, AmInvestment Bank is cautious of the high net gearing ratio of 57 per cent as of the first nine months of FY20 (9MFY20).

With the capital expenditure (capex) requirement for the expansion of Sunway’s healthcare business and ongoing property development, the research firm expected its net gearing to stay above 50 per cent in the next three years. “However, the proceeds from conversion of irredeemable convertible preference shares (ICPS) of about RM2 billion will reduce Sunway’s gearing to about 30 per cent.

“We believe the outlook for Sunway remains positive premised on its improved unbilled sales of RM3.1 billion, better income contribution from property investment as the Covid-19 pandemic subsides, a robust outstanding order book of

RM5.3 billion and strong growth potential in its healthcare business.”

Analysts believe the outlook for Sunway remains positive premised on its improved unbilled sales of RM3.1 billion, better income contribution from property investment as the Covid-19 pandemic subsides, a robust outstanding order book of RM5.3 billion and strong growth potential in its healthcare business.