Uem Sunrise Berhad - Disposes Mayfair Site for RM304.1m

Date: 13/11/2019

Source  :  PUBLIC BANK
Stock  :  UEMS       Price Target  :  1.10      |      Price Call  :  BUY
        Last Price  :  0.655      |      Upside/Downside  :  +0.445 (67.94%)

UEM Sunrise (UEMS) announced that its wholly-owned subsidiary, UEM Sunrise (St Kilda Road) Pty Ltd had entered into a contract of sale for the divestment of a site and building located at 412 St Kilda Road in Melbourne, Australia (previously earmarked for redevelopment i.e. Mayfair, its third project in Australia), with a net lettable area of approximately 16,258 square meters, 174 car park bays plus all improvements and fixtures for a total cash consideration of AUD$107.1m or RM304.1m. The disposal is expected to be completed by the end of the year and give rise to an estimated net gain on disposal of RM54.m (A$19.1m). Earnings estimates are kept unchanged for now as this is within our assumptions. Maintain Outperform and TP of RM1.10, pegged at c.65% discount to RNAV. We are still of the view that property demand could take longer than expected to recover, especially those with high exposure to Iskandar Malaysia. That said, UEMS has low holding costs and could unlock the land value by outright land sale or via JVs.

  • Property details. The said property was acquired in May 2016 for A$58m. The property is located at a strategic corner site of St Kilda Road and Bowens Crescent, one of the main arteries into the Melbourne Central Business District and flanked by a mix of office, residential and mixed-use towers. The site currently accommodates a 21-storey building with panoramic views overlooking the Royal Botanic Gardens to the north, Fawkner Park to the north-east and Albert Park, as well as Port Philip Bay to the south and south western aspects, according to the group. The Group launched the redelopment project i.e. Mayfair in 2017 and had sold c.40% of the 152-units off-the-plan.

Source: PublicInvest Research - 13 Nov 2019

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