Sunsuria Berhad (Sunsuria) reported a 2QFY23 net profit of RM4.8m (+78.0% YoY,  +>100% QoQ) which came in broadly within our expectations. Though Group YTD  net profit of RM5.9m ( -42.8% YoY) constituted about 40% of our full year estimates,  we expect its billings to be stronger in the next two quarters as on-going projects pick up in speed. Albeit higher revenue achieved in 1HFY23, Group pre-tax profit  (PBT) slipped 23% YoY to RM15.4m due to lower gross profit margin and increased sales and marketing expenses combined with initial expenses incurred for the  Healthcare and Education divisions. No change to our earnings estimates. We maintain our Neutral call and RM0.40 TP, based on a 0.4x to price-to-book ratio  (PBR), which is pegged at sector average.

• 2QFY23 revenue rose 66% YoY, to RM122.8m, mainly attributable to a higher percentage of construction works achieved from the ongoing projects at  Sunsuria Forum 2 (Setia Alam), Sunsuria City Township and Bangsar Hill Park.  Correspondingly, Group PBT rose 44% YoY to RM10.9m. As at 2QFY23, the  Group’s unbilled sales stood at RM962.20m. Separately, the Sunsuria  Healthcare division launched Sunsuria Care, a community-driven initiative that integrates healthcare services into the various property developments of the  Group via Care Hub which offers basic healthcare services.

• Remaining total GDV of RM9bn. Sunsuria currently has c.396 acres of  undeveloped landbank with potential gross development value (GDV) of  RM9bn which we estimate could take at least 8-10 years to develop. About  RM6bn GDV is mainly from Sunsuria City @ Salak Tinggi which has already completed projects with combined GDV of RM1.4bn to-date. On-going residential development projects, among others, include Tower A, D and E of  Bangsar Hill Park, Seni Residences and multi-facility serviced apartment  Tangerine Suites at Sunsuria City township and integrated mixed development  Forum 2 at Setia Alam.

Source: PublicInvest Research - 29 May 2023