PROPERTY developer Sunsuria Bhd (formerly known as Malaysia Aica Bhd) is understood to be in talks to sell about 10% of its 330-acre tract in Sepang to an international education group, sources familiar with the matter tell The Edge.

It is learnt that it is negotiating a price of between RM80 and RM100 psf, which works out to RM115 million to RM143.7 million for the parcel.

The sale would be a boon for Sunsuria as it had acquired the land for only about RM41 psf about three months ago.

To recap, in April, Sunsuria bought the remaining 50% stake in Sime Darby Sunsuria Development Sdn Bhd that it did not own for RM173.4 million with a shareholder advance of RM16.4 million. The RM41 psf price was decided on because the tract was already net of major infrastructure enhancements done by Sime Darby.

Sime Darby Sunsuria Development was a 50:50 joint venture formed by conglomerate Sime Darby Bhd and Sunsuria to undertake the development of the 330 acres with the Xiamen University Malaysia campus as the nucleus. An integrated township, dubbed “Suria Serena”, will arise around the campus and be strategically connected to the Express Rail Link and highways.

It is not known how Sunsuria managed to obtain such a high premium for the land from the education group but the sale is likely to have a direct and positive impact on its bottom line.

“It [the international education group] has a good name and is looking to capitalise on the development of the Xiamen University  Malaysia campus in the same area. The deal should be concluded in a matter of weeks,” says a source. “It looks like a good deal for Sunsuria, which stands to make a handsome gain.”

The RM1.3 billion Xiamen University Malaysia campus will be located in Bandar Kota Warisan, Sepang, and is slated to be built on 150 acres. The first enrolment of students will be in September this year. News reports estimate the gross development value of the 330-acre tract at RM6.4 billion.

In April, Sunsuria changed its financial year-end from March 31 to Sept 30. For the 12 months ended March this year, it registered a net profit of RM4.4 million on revenue of RM77 million.

It is noteworthy that Datuk Ter Leong Yap, the controlling shareholder of Sunsuria with 50.1% equity interest, only took control of the developer from previous controlling shareholder Tan Sri Robert Tan Hua Choon early last year and Sunsuria was reclassified a property company in July last year.

The company has a healthy balance sheet with cash and cash equivalents of RM40.1 million as at March 31, 2015, while its short-term borrowings stood at RM30 million. It had no significant long-term debt commitments.

UOB Kay Hian, one of the few research houses tracking Sunsuria, has a “buy” call on the stock and a target price of RM2.16. This is at a 122.7% premium to its 97 sen close last Friday, giving the company a market capitalisation of RM614.4 million.

Part of Sunsuria’s appeal could be its growth possibilities. Market talk has it that it could fully acquire its 81%-owned Sunsuria 7th Avenue II, which is on a 14-acre tract with the potential to generate a GDV of RM1.3 billion.

Interestingly enough, UOB Kay Hian has estimated the GDV of the 330-acre tract at more than RM10 billion.

“We believe the Suria Serena township could be worth over RM10 billion as it becomes a new residential epicenture to the nearby villages and residential clusters. While the investment community is generally cautious about the property sector, the market agrees that Suria Serena will be a successful township, noting that it has the necessary ingredients of success — it envelopes the iconic Xiamen University Malaysia campus that will serve as a tourist spot, feature excellent logistics infrastructure and be adjacent to an economic activity centre [a cluster of light factories],” it says in a mid-May report.

Despite the bullish call and target price, the research house sees Sunsuria registering a net profit of RM5 million on revenue of RM64 million in FY2015 ending Sept 30. In the following year, the Singapore-based research house sees the company making a net profit of RM11 million on revenue of RM95 million.

This article first appeared in The Edge Malaysia Weekly, on July 6 - 12, 2015.

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