23 August 2010
R e su lt s N o te
23 August 2010
MARKET DATELINE
i) Sunway Velocity; ii) Sunway South Quay condo; and iii) Commercial area in
Sunway Damansara. So far in 1H10, Suncity has launched RM966m worth of FYE Dec FY10 FY11 FY12
projects, generating new sales of RM424m, representing a take up of roughly EPS chg (%) - (0.4) -
44%, exceeding internal sales target of RM411m. Going into 2H10, Suncity will Var to Cons (%) (7.0) (6.4) (8.7)
launch the remaining RM798m worth of new projects. The upcoming Sunway
PE Band Chart
Velocity has managed to attract 2,000 registrants. The project has a total GDV
of RM1.5bn, located at Jalan Peel, Cheras. The first launch will consist of 112
PER = 11x
units of office suites with 2 levels of retail lots on the ground floor, as well as PER = 9x
PER = 7x
264 units of service apartments. Pricing is about RM450-500psf. As for the PER = 5x
Tianjin, China project, Suncity will sign the equity JV agreement next month.
The consortium partners include Keppel Land from Singapore, Shima from
China, Mitsui Fudosan from Japan, Far Glory from Taiwan and etc. The Tianjin
Eco-City project is worth a preliminary GDV of RM2.5bn.
♦ Debt free post-REIT listing. Following the successful listing of REIT, Suncity Relative Performance To KLCI
will become a net cash (about RM120m based on proforma) company, after
utilisting part of the proceeds to pare down debt. This would give the company Sunway City
♦ Risks. The risks include: 1) competition from peers; 2) delays in launches and
approvals; 3) rising raw material prices; and 4) country risk.
♦ Investment case. Following the adjustments in our forecasts, our RNAV-based Joshua Ng
fair value is revised slightly to RM5.20, from RM5.33, based on an unchanged (603) 92802237
joshuang@rhb.com.my
15% discount. We maintain our Outperform rating on the stock.
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Table 2. Suncity Quarterly Results (Suncity changed its FYE from Jun to Dec in FY09)
FYE Dec (RMm) 4QFY09 1Q10 2Q10 QoQ YoY 1H09 1H10 YoY Comments
(Apr- (%) (%) (%)
Jun09)
Turnover 230.3 283.3 262.3 (7.4) 13.9 493.0 545.6 10.7 Qoq decline was mainly dragged down by lower
contribution from the property development
division.
Prop dev 73.8 97.5 61.7 (36.7) (16.4) 176.9 159.2 (10.0) Qoq decline was attributed to the completion and
delivery of Sunway Giza in the previous quarter.
Prop invt 67.1 79.0 73.6 (6.8) 9.7 135.1 152.6 13.0
Leisure 24.2 29.4 41.4 41.0 71.2 48.3 70.8 46.6
EBIT 67.7 91.8 121.8 32.7 80.0 145.8 213.6 46.5 2Q10 EBIT included a one-off gain on land disposal
amounted to RM41.8m.
Prop dev 20.2 23.2 12.8 (44.9) (36.7) 49.2 36.0 (27.0)
Prop invt 45.4 53.7 85.6 59.4 88.7 85.7 139.2 62.4 2Q10 improvement was mainly due to stronger
contribution from Sunway Pyramid Shopping Mall,
driven by higher visitorship and good rental yield.
Leisure 1.4 4.1 8.5 >+100 >+100 3.1 12.6 >+100
Hospitality 2.0 11.2 13.3 19.1 >+100 8.7 24.6 >+100 Better performance in 2Q10 was due to higher
average room rate.
Healthcare (1.2) (0.4) 1.6 >-100 >-100 (1.0) 1.3 >-100
Others 0.0 0.0 0.0 Na Na 0.0 0.0 Na
Finance cost (15.4) (17.1) (16.9) (1.3) 9.5 (32.4) (34.0) 4.8
Asso & jv 8.8 12.6 8.2 (35.0) (7.7) 16.9 20.7 22.5
Other Income 0.0 0.0 0.0 Na Na 0.0 0.0 Na
Pretax profit 61.1 87.3 113.1 29.6 85.1 130.3 200.4 53.8
Tax (16.5) 301.4 (21.4) >-100 29.3 (29.7) 280.0 >-100 Positive tax expense in 1Q10 was due to the
reclassification of certain investment properties to
non-current assets held for sale pursuant to the
proposed sale to REIT. As a result of the
reclassification, Suncity has reversed deferred tax
liability amounting to RM318.5m (RM181.4m net)
PAT 44.6 388.7 91.7 (76.4) >+100 100.6 480.4 >+100
MI (18.4) (165.4) (20.1) (87.9) 9.1 (46.2) (185.4) >+100
Net profit 26.2 223.3 71.7 (67.9) >+100 54.4 295.0 >+100 2Q10 net profit included a one-off fair value gain of
RM41.8m (RM32.4m net), arising from the
completion of land sale whereby Suncity sold three
parcels of leasehold land to Sunway Pyramid Sdn
Bhd.
EPS (sen) 5.6 47.5 15.3 (67.9) >+100 11.6 62.8 >+100
NTA (RM) 3.8 5.0 5.2 3.0 34.8 3.8 5.2 34.8
DPS (sen) 8.0 0 31.0 Na Na 8.0 31.0 >+100 Surprise on 2Q10 dividend.
EBIT Margin 29.4 32.4 46.4 29.6 39.2 Excluding 2Q10 EI, EBIT margin was 31.5%.
(%)
Prop dev 27.3 23.8 20.7 27.8 22.6
Prop invt 67.6 68.0 116.2 63.5 91.2
Leisure 6.0 14.1 20.5 6.5 17.8
Hospitality 5.5 24.3 26.7 11.5 25.5
Healthcare (4.1) (1.3) 4.6 (1.8) 1.9
PBT margin (%) 26.5 30.8 43.1 26.4 36.7
Normalised tax 27.1 (345.4) 18.9 22.8 (139.8) Lower effective tax rate in 2Q10 was due to
rate (%) utilisation of unabsorbed losses and unutilised
capital allowances of certain subsidiaries.
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Total 894.2
NTA FY09 2,174.6
Warrants conversion 746.6
RNAV 3,815.4
Enlarged shares base (mil) 623.3
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