We like Sime Darby Property (SDPR) for its strategically located landbank (at low prices) and its strong balance sheet (net gearing of 0.27x). We believe that after the kitchen-sinking exercise of writing off more than RM550m last year, the Group is emerging stronger with focus on digitalisation and cost & operation efficiency. The Group will also grow its industrial and logistics developments to support new sales for the year. It has total landbank of c.20k acres with gross development value (GDV) in excess of RM80bn. Also, we believe asset monetization via outright land sale is also possible this year as evidenced by similar move by its peers such as SP Setia and UEM Sunrise to unlock strategic land value. Sales achieved in 1QFY21 were RM630.2m or c.26% of its FY21 sales target of RM2.4bn with unbilled sales rising slightly to RM1.7bn, from RM1.58bn a quarter ago. All told, we upgrade SPDR to Outperform with an unchanged RM0.79 TP, pegged at c.70% to its RNAV.
Source: PublicInvest Research - 18 Jun 2021
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Mkttalk
Have to be cautious . GLCs not competitive and Management not stretched. Weak expectation by PNB . Look out for returns on assets .
2021-06-18 11:27