Sunway Bhd
SUNWAY’S share price has come under pressure lately, likely due to fears of a share overhang after a strategic shareholder, Singapore sovereign fund GIC Pte Ltd , started paring its stake. With GIC ceasing to be a substantial shareholder last week, investors can perhaps focus back on the company’s fundamentals and valuations, which appear attractive.

Sunway is one of Malaysia’s largest property and construction conglomerates with a solid track record and excellent reputation. Apart from Malaysia, it has operations in China, India, Singapore, Vietnam and Cambodia. It has a total landbank of 3,376 acres with potential GDV of RM50 billion. Unbilled sales stood at RM2.4 billion at end-June 2014.

The developer is poised to replicate the success of Sunway Resort City concept in Iskandar Malaysia, Johor. Dubbed Sunway Iskandar, the 1,800-acre township has an estimated GDV of RM30 billion. It is strategically located in Medini, which offers advantages such as no real property gains tax and minimum requirement for foreign purchasers.

Sunway is also looking to unlock the value of its construction arm by listing Sunway Construction Sdn Bhd (SCSB) on Bursa Malaysia by 2Q15. The listing is timely as SCSB is on track to benefit from the country’s major infrastructure spending.

In Budget 2015, the government apportioned some RM76 billion for infrastructure projects beginning next year. SCSB was awarded a RM1.17 billion contract for the first phase of the MRT project and stands a good chance to secure more jobs for the second phase. Its outstanding orderbook stood at a hefty RM3.4 billion at end-June 2014.

Sunway’s shares are trading at a trailing 12-month P/E ratio of 3.6 times and a price-to-book ratio of 0.98 times. Excluding revaluation gains, normalised P/E is 10.8 times. Dividends totalled 10 sen per share in 2013, translating into a yield of 3.2%.

This article first appeared in The Edge Financial Daily, on November 13, 2014.