UEM Sunrise (UEMS) swung into a 1QFY22 net profit of RM19.0m, after a string of losses in the recent quarters. The headline net profit came in within our estimates though above consensus at about 26% and 52% of full year estimates respectively. The profits were lifted mainly by local property development activities, sale of 19 industrial plots in SiLC phase 3 and divestment of non-strategic land (Seputeh: RM22m, 68⁰ Avenue: RM10m). Pre-sales in 1QFY22 dropped 59% YoY to RM110m due to lack of meaningful launches (only c.RM74m worth of properties launched so far) but the Group is expected to ramp up launches in the coming months and still plans to launch a total GDV of RM3.3bn in 2022. FY22 sales target is maintained at RM1.5bn. Unbilled sales stood at RM2.2bn, down from RM2.4bn a quarter ago. Maintain Neutral with TP unchanged at 38sen. divestment

• 1QFY22 revenue rose 65% YoY to RM417m, driven by higher progress billings and construction progress from local developments, mainly Residensi Solaris Parq in Dutamas, Aspira ParkHomes in Gerbang Nusajaya, Serene Heights Bangi, Senadi Hills in central Iskandar Puteri, Residensi Astrea in Mont'Kiara as well as the higher sales of Estuari Gardens in Puteri Harbour,. This is in addition to the revenue recognition of the sale of 19 industrial plots in the Southern Industrial and Logistics Clusters. In 1QFY22, it recorded sales of RM110m with 64% contributed by projects in the Central region mainly Serene Heights Bangi, KAIA Heights and Residensi Allevia in Mont'Kiara, with the remaining 36% from the Southern region mainly from Estuari Gardens, Aspira LakeHomes in Gerbang Nusajaya and Senadi Hills. As for launches, it only unveiled the second and final phase of Aspira Gardens in Gerbang Nusajaya featuring 80 units of double-storey clusters and semi-detached valued at RM74m.

• Eyeing RM3.3bn in new projects. For FY22, UEMS is maintaining its sales target at RM1.5bn, with plans to launch projects worth RM3.3bn. This includes activating the 1.3-acre site in Collingwood, Melbourne into a mixed-development project with an estimated GDV of A$250m (RM735m). For 2H2022, the Group is planning to unveil new phased launches of existing projects, namely Serene Heights Bangi as well as Senadi Hills and the Aspira-themed products in Iskandar Puteri. It is also planning to launch a new mixed-use transit oriented development on the 6.86-acre land adjacent to the Taman Connaught MRT station in Cheras and a new mixed integrated high rise development in Mont’Kiara (MK 31).

Source: PublicInvest Research - 26 May 2022