Highlights

• We attended a briefing organized by UEM Sunrise, led by the group’s MD/CE O En, Anwar Syahrin Abdul Ajib last Thursday, to recap on the group’s FY14 performance, growth strategy as well as going forward launches.

• Management shared that the group’s FY 15 sales target falls between RM2.0-2.4bn (FY14: RM2.4bn). As for revenue guidance, UEM is expecting flattish revenue yoy while net profit to reach RM500-550m.

• Despite that the group’s FY15 profit target exceeds our forecasts by 5-16%, we continue to maintain our forecasts as we remain conservative given such challenging sector outlook for the year.

• Out of the RM2.4bn sales target for FY15, about RM1.2bn is expected to be derived from domest ic sales (RM0.7bn from Johor and RM0.5bn from central region) while remaining are from international sales.

• Although no sales figure for 1QFY15 was mentioned, management highlighted that sales during the quarter was satisfactory as it exceeded the group’s internal expectations despite having no launches in 1QFY15.

• Launches in FY15 would include Serene Heights, Sefina, Denai Nusantara, Estuari, Solaris 3, Artisan Hill, Conservatory Australia, Signature Residence and Almas Office. Total launches planned for the year is estimated to be up to RM3.7bn.

• With the group’s gearing level at 0.37x, of whic h it is still comfortable with, UEM will continue to be on the lookout for further strategic landbanking acquisitions. We understand that RM1bn will be allocated annually for landbanking exercise, either in Klang Valley, Northern region, East Malaysia or international.

Risks

• Slowdown in Nusajaya sales; failure to achieve sales target; high-beta stock.

Forecasts

• Unchanged, pending results release on 21 May 2015.

Rating

HOLD

• Posi tives: highly liquid proxy to property sector; large war-chest for landbank acquisitions; rich in newsflow.

Negatives

• : Share price is highly news-driven; vulnerable to external slowdown; highest P/E multiple in the sector (more than 2x sector average).

Valuation

Maintain HOLD with unchanged target price of RM1.58 based on unchanged 15.1x FY15 P/E or 50% discount to RNAV).

Source: Hong Leong Investment Bank Research - 5 May 2015