Uem Sunrise Berhad - Selling Melbourne Asset For AUD125m

Date: 25/11/2019

Source  :  PUBLIC BANK
Stock  :  UEMS       Price Target  :  1.10      |      Price Call  :  BUY
        Last Price  :  0.65      |      Upside/Downside  :  +0.45 (69.23%)

UEM Sunrise (UEMS), via its wholly-owned subsidiary UEM Sunrise (La Trobe Street) Pty Ltd has entered into a contract of sale with Scape Australia Management Pty Ltd. to sell the service apartment block at Aurora Melbourne for AUD125m(or c.RM355m). To recap, this is the asset that was mutually terminated with Ascendas back in September due to disagreement on specifications of certain aspects relating to the property. The selling price now is higher than the AUD120m agreed with Ascendas earlier. This disposal is within our expectations though the timing is now expected to only be completed by 2Q2020 instead of end-2019. However, our earnings are kept unchanged for now as we believe its asset disposal is still in line with our forecasts. Maintain Outperform and TP of RM1.10, pegged at c.65% discount to RNAV.

  • Aurora Melbourne Central is an 88-storey mixed-use development comprising 959 residential apartments, 252 serviced apartments, office suites and retail with a total Gross Development Value (GDV) of AUD750.0m (or c.RM2.15bn). The project was completed in three stages with the first separable portion (SP) known as SP3 completed and handed over in September 2018 followed by SP4 in May 2019. The combined settlement (full payment of purchase price and handover) rate achieved was 99% with a settlement value of AUD387.1m. The final separable portion i.e. SP5 with a GDV of AUD241.2m is expected to be handed over to the buyers in 4QCY19. The remainder of the development is the 252 units of serviced apartments located on levels 10 to 32 which is the portion disposed en-bloc in this latest deal. The disposal is expected to be completed by 2Q2020 and expected to yield net disposal gain of AUD18.3m (RM51.9m) in FY2020.

Source: PublicInvest Research - 25 Nov 2019

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