- We maintain our BUY call on UEM Sunrise (UEMS) with our fair value lowered from RM2.97/share to RM2.78/share as we factor in the conversion of MCRPS issued by UEMS to the UEM Group.

- UEMS’ FY13 results were broadly in line with expectations with a headline net profit growth of 29% YoY to RM579mil.

- This was aided by land sales gains of ~RM350mil (60% of overall group profits), but partly offset by:- (i) accrual of legal fees & loan documents for select projects (~RM40mil); and(ii) ESOS grants (RM~RM10mil) that were booked in 4Q13.

- The land sale gains included the sale of 12.5 acres in Puteri Harbour to Southern Marina Development (a JV between the Kuok Group and Khazanah Nasional), which set a benchmark price of RM333psf.

- UEMS’ new sales rose from RM2bil in FY12 to RM3bil in FY13.

- The group chalked up RM900mil sales in 4Q13 alone – including RM400mil for the first block of Residensi 22 @ Mt. Kiara (80% sold as at end-January 2014), RM170mil for Teega @ Puteri Harbour and RM100mil for East Ledang.

- Management however noted that part of the sales during the previous quarter could have been prompted by investors rushing to sign their SPAs ahead of the new property cooling measures introduced in 2014.

- UEMS is ramping up its launches for FY14F with RM3.8bil worth of new properties being lined up (FY13: ~RM1.6bil), while maintaining a new sales target of ~RM3.2bil (Nusajaya: RM2.2bil; non-Nusajaya: RM1bil).

- Key launches for the year include Almas at Puteri Harbour and Serene Heights in Bangi; the latter will debut in 2Q14. Also in the pipeline is the second block of Residensi 22.

- After beating its FY13 KPI net profit growth target of 20% (achieved: 29%), UEMS’ management is setting a new target of 10% for FY14F (ours: 3%). Our forecast does not assume any land sales. Unbilled sales stood at RM3.4bil as at 31 December 2013.

Source: AmeSecurities