Sunway (BUY)

FY11 results to beat our estimates

'''' Sunway is expected to release its FY11 results on Wed, 29 Feb-12 and we expect full year results to meet both ours and street's estimates of ~RM300.2m (23.2 sen/share) with a potential for a slight upside surprise. Of note, 9MFY11 results already made up 75% of our full year's forecast.

'''' We believe that 4Q's earnings should be driven by the rebound in its construction division after the Raya festive break and Middle East summer holidays and expansion in property margins from 13% as development matures for Nexis and Velocity. New property sales were extremely strong, nearly doubling 9MFY11 new sales to come in at ~RM900m (based on effective stake), bringing its FY11 new sales to RM2bn.

'''' Overall, with the latest developments, Sunway has an unbilled property sales of ~RM2.26bn, translating to ~4.2x FY10's property revenue. Meanwhile, its outstanding construction order book stands at RM2.36bn, translating to ~2.2x FY10's construction revenue.

'''' We continue to see Sunway as a value play trading at only single digit P/E and discount to its peers. We maintain our BUY call on Sunway with a TP of RM3.12.

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Market likely to extend its consolidation''

'''' KLCI is expected to further consolidate this week to neutralise overbought technical conditions and rebuild support for a sustained uptrend going forward.

'''' Immediate resistance levels are 1570-1580 whilst supports fall on 1550 psychological level, 14-d SMA (1545), mid Bollinger band (1536) and 30-d SMA (1531).''

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UOADEV: More upside if it breaks the 20-d SMA resistance

'''' Based on daily chart, we reckon that UOADEV is likely to find a short term bottom near RM1.38 (38.2% FR from high RM1.72 and low RM1.16).

'''' Stronger support is RM1.30 (23.6% FR). After a brief consolidation, the next upswing is expected to push prices towards its 30-d SMA (RM1.47) and mid Bollinger band or 20-d SMA (RM1.50). A breakout above RM1.50 will push prices higher towards upper Bollinger band (RM1.56), rm1.62 (16 Jan 12's high) and 61.8% FR (RM1.72). Significant resistance is at 50% FR (RM1.89).

'''' Cut loss below RM1.30.