HLIB retains "buy" on UEM Sunrise, TP RM4.04

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KUALA LUMPUR (July 1): Hong Leong
Investment Bank Research (HLIB) has retained a “buy” call and its target price
of RM4.04 on UEM Sunrise Bhd after its chief revealed in The Edge’s City & Country pullout that the property developer plans
for a RM4 billion worth of property launches this year.

In the interview, UEM Sunrise
chief executive officer Datuk Wan Abdullah Wan Ibrahim said of the RM4 billion
in gross development value, RM3 billion will come from Nusajaya, Johor, with
the remainder from its central and international developments.

In a note today, HLIB analyst
Sean Lim said the research house is “cautiously optimistic” of UEM Sunrise’s
plans to launch RM3 billion worth of projects in Nusajaya due to a robust
demand in the region.

“We believe UEM Sunrise has a
safety net in the sense that it is in a position to control the supply/demand
situation in Nusajaya, which should help prevent the dreaded property overhand
situation. Moreover, we expect bulk of the launches to be in the high-value Puteri
Harbour, which continues to enjoy strong demand from foreigners and wealthy
Malaysians,” Lim commented in the note.

He also said the research house
expects the property developer to acquire both township and niche high-rise
land banks, given that it now has strong execution capabilities for both segments
of the property market.

“(UEM Sunrise) management’s tone suggests
some major deals could be struck soon, before the end of the year,” Lim said.

He added HLIB expects land
acquisitions to increase UEM Sunrise’s net gearing level, which currently
stands at 0.16 times.

“(The net gearing level) implies
RM4.1 billion of gearing headroom before it hits 0.5 times,” said Lim in the
note.

UEM Sunrise shares ceded four sen
to trade at RM3.08 at 2:57 pm. The counter had a trading volume of 1.096 million.