Investment Highlights

• We maintain our HOLD call on UEM Sunrise (UEMS) with an unchanged fair value of RM1.00 based on a 40% discount to its RNAV (Exhibit 2). We revised our FY18-20 earnings upwards by 7.1%, 4.4% and 3.8% to RM260.8mil, RM283.3mil and RM242.1mil respectively to reflect the timing of revenue recognition.

• UEMS registered its 1HFY18 net profit of RM239.1mil. After stripping off exceptional items such as foreign translation differences, cash flow hedge and impairment of interest in a JV amounting to RM46.9mil, 1HFY18 core net profit of RM192.2mil (+926% YoY) came in above both our and consensus expectation, accounting for 78% both our and consensus numbers.

• 1HFY18 revenue grew by 21.1% YoY, mainly driven by the Iskandar Puteri land sale to Country View Bhd and RA Suria Sdn Bhd amounting to RM359.2mil (44% of revenue) which came in earlier than expected.

• UEMS recorded new sales of RM663.8mil (+69% YoY) YTD, mainly from ongoing projects such as Mayfair, Residensi Solaris Parq, Serimbun, Kiara Kasih, Symphony Hills and the completed properties including Estuari Gardens. With these, the company is on track to meet its annual target of RM1.2bil.

• The unbilled sales of RM4.9bil (RM4.8bil in 1QFY18) will be progressively recognized over FY18-20.

• In 1HFY18, UEMS launched two projects worth RM354.7mil namely Kondominium Kiara Kasih @ Segambut (RM300K – GDV RM215.7mil); and Serimbun @ Iskandar Puteri (RM630K-RM1.4mil – GDV RM139mil) has recorded a take-up rate of more than 65%.

• For 2HFY18, UEMS has lined up RM665.5mil worth of new launches namely Residensi Astrea @ MK27, KL (high-rise residential – GDV RM326.7mil); Serene Heights 1D1 & 1B2 @ Bangi, Selangor (landed residential – GDV RM106.8mil), Resi 6 @ Gerbang Nusajaya, Johor (landed residential – GDV RM95.3mil); and Parcel i6 @ Taman Nusantara, Johor (commercial – GDV RM136.7mil).

Source: AmInvest Research - 29 Aug 2018