-  We maintain HOLD on Sunway, with an unchanged fair value of RM3.08/share, based on a 5% discount to an SOP value of RM3.25/share.

-  Sunway posted core earnings of RM126mil in 2QFY14 (+14.0% each QoQ and YoY), bringing the 1HFY14 total to RM236.3mil (+17% YoY).

-  This is in line with expectations, accounting for 52% and 48% of our and consensus forecasts, respectively. It declared a single-tier dividend of 5.0 sen/share, equal to the quantum a year earlier and in line with estimates.

-  The results were achieved on the back of a 4% YoY growth in revenue to RM2.23bil. Both the topline and EBIT accounted for 50% of our estimates.

-  Notably, 1HFY14 group EBIT margin improved by 2ppts YoY, aided by higher premium property development and improved performance in the construction division.

-  Construction EBIT grew substantially by 32% YoY to RM57mil at the half-way mark, accounting for 67% of our estimate. This is offset by lower contributions from property investment (40% of our EBIT forecast).

-  Job replenishment totalled RM531mil (all internal), bringing the total outstanding order book to RM3.48bil vs. RM3.7bil as at end March 2014. The group has targeted RM2.5bil worth of jobs, including 70% of external projects, for FY14F. The outstanding external jobs total RM2.54bil, 1.6x FY13’s construction revenue.

-  In property development, 1HFY15 sales reached RM807mil (effective: RM628mil), while unbilled sales totaled RM2.4bil (effective: RM1.9bil) as at 30 June 2013.

-  Sunway said the stronger operating profit YoY was mainly due to higher contributions from the Klang Valley projects like Sunway Velocity and Sunway South Quay.

-  The group is targeting to launch RM2.3bil (effective: RM1.7bil) worth of properties in FY14, with a targeted sales of RM1.8bil (effective: RM1.3bil).

-  Notably, it has seen full bookings for its recent launch of Citrine offices with a GDV of RM73mil. As at 31 July 2014, it has launched RM1.15bil worth of properties.

-  We maintain our numbers and our call. While it is currently carrying out a comfortable amount of outstanding project a major risk forward is the lack of external jobs so far.

Source: AmeSecurities