UEM Sunrise earnings forecast unchanged despite dim outlook in Australia
KUCHING: Analysts are leaving their financial year 2018 to 2020 (FY18 to FY20) earnings forecasts for UEM Sunrise Bhd ( UEM Sunrise) unchanged despite the group’s less-than-rosy outlook in Australia.
According to AmInvestment Bank Bhd (AmInvestment Bank), the Australian Financial Review on January 8, 2018 reported that Malaysia’s UEM Sunrise is prepared for as much as a 10 per cent default rate on the settlement of apartments in its A$ 330 million Melbourne Central Business District (CBD) tower due to tough market conditions and weak prices of Australian properties.
“It quoted UEM Sunrise managing director or chief executive officer Anwar Syahrin Abdul Ajib as saying that ‘if we can get more than 90 per cent (on the settlement), we will be more than happy’,” the research firm said.
“Despite the less-than-rosy outlook in Australia, UEM Sunrise said there are no defaults on its Melbourne apartment projects Aurora and Conservatory, and it is on track to settle the units which have been handed over.
“Aurora is fully sold while Conservatory has a take-up rate of 96 per cent as at end-December 2018. Hence, we believe there is no impact to our FY18-FY20 earnings forecasts.”
AmInvestment Bank highlighted that the settlement rate for Aurora has been encouraging considering that Aurora SP3 (137 completed units) and SP3A (70 completed units) which were handed over on September 10, 2018 and December 3, 2018 separately, has a settlement rate of 95 per cent and 87 per cent, respectively as at December 31, 2018.
“No issue is expected to affect the continuation of this positive trend.”
The research firm further highlighted that with Conservatory, SP1 (338 completed units) was handed over and settled on December 14, 2018.
“In two weeks, UEM attained a settlement rate of 64 per cent, collecting A$ 143.8 million. The proceeds will be used to settle the total project loan of A$ 180 million.
“The company anticipates to hand over and settle a further 50 units from the remaining 229 units (yet to be handed over and settled) to fully discharge its loan obligation for Conservatory.”
As for Aurora SP4 (489 units) and Aurora SP5 ( 281 units), the research firm said that these are expected to be handed over and settled in May and October 2019 respectively, while the settlement of Conservatory SP2 (83 units) and SP3 (25 units) are expected to take place in February 2019.