KUALA LUMPUR: Analyst is mildly positive on Sunway Bhd’s recent acquisition of a 4.34-acre freehold land in Wangsa Maju for RM51.07 million, given the continued expansion in the group’s landbank at a competitive land cost.
Hong Leong Investment Bank (HLIB) Research in a note today said the proposed development allows Sunway to venture into more affordable segment with average selling pricing of RM550,000.
It said besides that, Sunway will leverage on the experience and knowhow of the joint venture (JV) partner in the development within the vicinity and yield better return.
HLIB said the development is also strategically located in less than 8km from KLCC and within 1.5km of amenities like Wangsa Walk Mall and Aeon Big Wangsa Maju with easy access via major highways like DUKE, AKLEH and MRR2.
Yesterday, Sunway has announced that it is acquiring the land from Setapak Heights Development Sdn Bhd, via its 55 per cent owned JV company with Huatland Development Sdn Bhd, Sunglobal Resources Sdn Bhd (SRSB).
Sunway said SRSB intends to develop a mixed development comprising two blocks of serviced apartments with some lifestyle units on the podium with a gross development value (GDV) of RM500 million.
HLIB said based on Sunway’s 55 per cent stake, the estimated effective GDV is RM275m.
It said this will increase the group’s effective GDV by 0.8 per cent to RM36.2 billion and total GDV will grow by 0.9 per cent to RM54 billion.
HLIB said assuming profit before tax margin of 22 per cent, the estimated net present value will mildly increase the group’s estimated revalued net asset valuation for property segment by 0.1 per cent.
HLIB has maintained its “buy” call on Sunway with unchanged target price of RM5.14.
“Sunway is our top pick within the sector as we believe it should be rerated and trade closer to its peers such as IJM and Gamuda given its diversified income stream and declassification from property sector,” it said.
HLIB said at a price earnings ratio of 13.6 times as compared to peers, Sunway represents a deep value stock with mature investment properties and the underappreciated trading and healthcare segment.