Sunsuria Berhad (Sunsuria) is the offshoot of a business venture started by its founder and owner, Tan Sri Datuk Ter Leong Yap, which has successfully delivered various residential, commercial and industrial property projects within the Klang Valley. The biggest project embarked by the Group so far is the 525-acre flagship township located at Salak Tinggi, Putrajaya South, named “Sunsuria City”. The integrated township, which has an estimated gross development value (GDV) of RM7.6bn, is anchored by Xiamen University Malaysia (XUM), the first overseas university campus from China. Over the years, Sunsuria has successfully completed projects worth RM2.3bn, mainly located in the Greater Kuala Lumpur (KL) / Klang Valley area. Landbank remaining is currently at 395 acres with estimated GDV of RM9bn. Unbilled sales currently stand at RM889m, with targeted launches estimated at RM574m, mainly consisting of landed and industrial properties. Net gearing is currently at 0.43x. We value Sunsuria based on a 0.4x to price-to-book ratio (PBR), which is pegged at sector average, to derive a target price of RM0.40. We initiate coverage on Sunsuria with a Neutral rating.

• Remaining total GDV of RM9bn, with RM6bn from Sunsuria City, c.RM2bn from Bangsar Hill Park, and the remainder from Banting (RM560m GDV) and Ijok (RM467m). Its flagship development, Sunsuria City, which was awarded ‘Best Sustainable Township Development’ by ASEAN Property Development Award in 2020, has successfully completed RM1.4bn worth of properties so far. The township has a direct link to the Salak Tinggi ERL station and XUM. XUM is a government-to-government (G2G) project owned by the Government of China, which started enrolment in February 2016 with 1,450 students, which now has 6,000-7,000 students currently.

• Urban redevelopment projects. Leveraging on the Founder’s family expertise in urban redevelopment projects, Sunsuria acquired a 51% stake in Bangsar Hill Park Development Sdn Bhd (BHPD). Bangsar Hill Park on Lorong Maarof is part of the RM3bn 9.82-acre leasehold redevelopment of the Sri Pahang flats in Bukit Bangsar, Kuala Lumpur, being undertaken by BHPD. It has launched 3 blocks (A, D and E) with combined GDV of RM1.13bn, with c.73% of the GDV sold, an impressive achievement as the project was officially launched in June 2021, during the COVID-19 pandemic. BHPD still has 5 blocks remaining (estimated at about RM2bn) with the entire project to be completed by 2028.

• Initiating with a Neutral rating. We peg Sunsuria at c.0.4x PBR, which is similar to sector average currently, to derive our target price of R0.40. We initiate coverage on Sunsuria with a Neutral rating. Near term challenges such as rising costs, labor shortages and property affordability could affect market sentiment and hence, sector valuations could stay cheap longer than expected.

Source: PublicInvest Research - 30 Dec 2022