This article first appeared in The Edge Financial Daily on September 17, 2019

Sunway Bhd
(Sept 13, RM1.64)
Maintain buy with a higher fair value (FV) of RM1.98: Sunway Bhd, via its 60:40 Tianjin Eco-City Sunway joint venture (JV), has won a tender to acquire a plot of land known as Sino-Singapore Tianjin Eco-City Plot 30c located in Tianjin, China measuring approximately 6.85 acres (2.77ha) at a tender price of 438 million yuan (RM258.6 million).

Tianjin Eco-City Sunway will undertake a residential development known as Sunway Garden Phase 3, which consists of seven blocks of condominiums on the land. The project has a gross development value of more than 1.3 billion yuan.  

The proposed development is expected to commerce in May 2020 and is targeted to be completed by May 2023. It is expected to contribute positively to the earnings of Sunway Group from financial year 2023 (FY23) onwards.  

We are positive about the latest development as it will help sustain Sunway’s property earnings over the medium term. However, we make no changes to our FY19-FY21 earnings forecasts as the project is still in the planning stage. Nonetheless, this development will add RM43 million into our revised net asset value calculations and will increase our FV from RM1.97 to RM1.98 based on sums-of-parts valuations. — AmInvestment Bank, Sept 13