HLIB Research positive on Sunway JV with Daiwa


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KUALA LUMPUR (June 12): Hong Leong IB Research has maintained its “Buy” rating on Sunway Bhd with an unchanged target price of RM.75 after Sunway’s subsidiary, Sunway Iskandar (56% owned by Sunway) entered into 30:70 joint venture with Daiwa for the acquisition of 13.02 acres land in Medini for RM63 million.

Sunway Iskandar is the vendor of the land.

In a note today, HLIB Research said it was positive on the proposed deal as this would help to monetise and expedite development in Sunway Iskandar given concerns about slowdown in the southern region.

“Based on our estimation, Sunway will pocket RM19 million profit for the land sell given its 56% stake and land cost at only RM27psf.

“Given the lower effective stake for the proposed GDV (from 56% to 16.8%) and net margin assumption of 20%, the potential loss of profit from the proposed development on 13.02 acres land is about RM16.5 million.

“On net basis, Sunway still earn extra RM2.5 million (circa 0.4% to FY15 bottomline) with faster monetisation on the land. Maintained Buy with target price remained unchanged at RM3.75 based on SOP valuations,” it said.