- We maintain HOLD on Sunway, with an unchanged fair value of RM3.08/share, based on a 5% discount to an SOP value of RM3.23/share.

- Sunway yesterday brought a group of analysts and fund managers for a site visit at Sunway Iskandar, in conjunction with the unveiling of the masterplan for the >RM30bil development, for which it has dubbed “Nature’s Capital City”.

- At the newly-unveiled show gallery, a briefing was conducted by Sunway property development division (Malaysia/Singapore) joint managing director Sarena Cheah, CFO Chong Chang Choong, and Sunway group executive director, property & construction (southern region & Singapore) Tan Wee Bee. The key takeaways are:-

- (1) The group is poised to execute the masterplan, with the maiden launch – the Citrine, at the Lakeview Precinct (one of six precincts) – slated within the next two months.

- (2) Sunway could potentially launch up to RM1bil worth of properties annually in the initial years. Management says it has the capacity to go beyond RM1bil annually, if it is required. Sunway welcomes JV partners with the capital to back up their commitment. It is difficult to say when revenue and earnings from Sunway Iskandar could peak during the 15-20 year development period.

- (3) The group is confident of its ability to differentiate itself from other developers in the economic corridor; it has pledged to retain 40% of the land at Sunway Iskandar (Medini and Pendas) for green spaces. It owns the biggest plot of land in Medini (the zone with special government incentives), with Sunway Iskandar making up 31% (691 acres) of land there.

- (4) Other than unique features for each of the six planned precincts, competitively-priced products, easy accessibility and proximity to Singapore, the group is banking on its proven track record and development philosophy to attract potential investors and buyers alike.

- (5) Sunway will allocate 60% and 40% of the development for the residential and commercial portions, respectively. We understand that possibly 20% or more of the total value (comprising mainly commercial properties such as a mall) could have their ownership retained for recurring income and strategic purposes (such as tenancy management, or for injection to SUNREIT).

- As the group braces for its new phase of growth, execution would be key. Notwithstanding the current cautious property market, Sunway Iskandar is set to be a long-term growth anchor for the group. We maintain our Hold call for now.

Source: AmeSecurities