KUALA LUMPUR (May 14): Shares in UEM Sunrise Bhd (UEMS) fell as much as seven sen or 5.51% in the early trades after the property group was removed from the MSCI Malaysia Index.

At 10.44am, the stock was traded at RM1.21, still declined six sen or 4.72% with 9.22 million shares being traded between RM1.20 and RM1.26.

It was one of the most active counters across the exchange and was earlier among the top losers after the market open.

With the current price, UEMS (fundamental: 1.5; valuation: 2) has a market capitalisation of RM5.763 billion.

In a note to client today, MIDF Amanah Research said UEMS has been removed from MSCI Malaysia Index in the latest review of constituents of MSCI Provisional Standard Indexes.

MSCI Malaysia Index is designed to measure the performance of the large and mid cap segments of the Malaysian market.

With 42 constituents, the index covers about 85% of the Malaysian equity universe, the firm added.

MIDF noted that UEMS share price had declined 3.8% to RM1.27 yesterday.

"MSCI is a benchmark index for measuring investment performance by international investors. We believe that the removal of the stock from the index has resulted in the selldown by foreign investors to rebalance their investment portfolio," the firm said.

Despite negative newsflow, MIDF Amanah Research believed that the fundamentals of UEMS remained intact.

"We also do not expect significant downside on its share price as valuation is already at all-time low," the firm added.

MIDF Amanah said UEMS has unbilled sales of RM3.9 billion as of end-FY14, which provides more than 2 years of earnings visibility and support its FY15 net profit.

"As for new sales, we are keeping our estimate of RM1.95 billion which is already lower than management's target of between RM2 billion and RM2.4 billion.

"We maintain our FY15 net profit forecast of RM491 million," the firm said.

MIDF Amanah Research has a Neutral call and target price of RM1.35 on UEMS.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)