Investment highlights

• We maintain our BUY call on Sunway Bhd (Sunway) with a slightly higher fair value of RM1.98 per share based on SOP valuations (Exhibit 1) from RM1.97 previously. We made no changes to our FY19–21 earnings forecasts.

• Sunway, via its 60:40 Tianjin Eco-City Sunway JV, has won a tender to acquire a plot of land known as Sino-Singapore Tianjin Eco-City Plot 30c located in Tianjin, China measuring approximately 6.85 acres (27,712.50 square metres) at a tender price of RMB438mil (RM257.8mil).

• Tianjin Eco-City Sunway will undertake a residential development known as Sunway Garden Phase 3 which consists of 7 blocks of condominiums on the land. The project has a GDV of more than RMB1.3bil.

• The proposed development is expected to commerce in May 2020 and targeted to be completed by May 2023. It is expected to contribute positively to the earnings of Sunway Group from the financial year 2023 onwards.

• We are positive on the latest development as it will help sustain Sunway’s property earnings over the medium term. However, we made no changes to our FY19–21 earnings forecasts as the project is still in the planning stage. Nonetheless, this development will add RM43mil into our RNAV calculations and will increase our FV from RM1.97 to RM1.98 based on SOP valuations (Exhibit 1).

Source: AmInvest Research - 13 Sept 2019