Sunway’s longterm outlook remains positive

KUCHING: Sunway Bhd’s (Sunway) long-term outlook remains positive, driven by its strong unbilled sales, orderbook, and business strategies, analysts say.

In a report, the research team at AmInvestment Bank Bhd (AmInvestment) said: “We believe the long-term outlook for Sunway remains positive premised on its strong unbilled sales of RM3.3 billion as at March 31, 2021 (5.5-times FY21F property development revenue), a robust outstanding order book of RM5 billion (2.5-times FY21F construction revenue), and itsexpansion plan in the healthcare business (which could increase capacity by 82 per cent in FY23F).”

It also noted that it is encouraged by the strong buying support for Sunway’s property launches against the backdrop of an uncertain sector outlook given that longer movement restrictions could lead to closures of sales galleries and stop-work order on construction sites in enhanced movement control order (EMCO) districts which could result in lower-thanexpected 2H sales.

It pointed out that in the first half of 2021 (1H21), Sunway’s total property sales accelerated by 137 per cent year-on-year (y-o-y) compared with RM675 million in 1HFY20), and contributed 73 per cent of the revised FY21F sales target.

However, it noted that sales momentum slowed down quarter-on-quarter (q-oq), whereby Sunway posted only RM0.4 billion in 2QFY21, showing a sharp decline of 62 per cent from its 1QFY21 sales of RM1.2 billion.

A bulk of the group’s 1QFY21 property sales were mainly from projects in Singapore, making up 75 per cent of total group sales, whereby 24 per cent came from local and one per cent from China.

“In 1QFY21, the property segment contributed 10 per cent and 20 per cent to the group’s revenue and pre-tax profit,” AmInvestment said.

The group has raised its FY21F sales target by 66 per cent y-o-y from only RM1.3 billion in FY20 because 1HFY21 property sales of RM1.6 billion have already reached the earlier target.

“This is underpinned by encouraging sales in excess of RM1 billion in Singapore in 1H21, particularly the high-rise condominiums, Ki Residences in Clementi and Parc Central in Tampines, which achieved take-up rates of 55 and 80 per cent respectively,” it said.

Given its promising outlook, AmInvestment retained its ‘buy’ recommendation on Sunway.