Results

• Above Expectations: FY15 core earnings (after adjusting for EI of -RM142m) was flat YoY, making up 106% and 103% of ours and consensus’ full year forecasts, respectively.

Deviation

• Mainly due to stronger than expected profit contribution from construction division.

Dividends

• Declared dividend of 6 sen/share. Total dividend declared year to date amounted to 49 sen/share (including special dividend of 26 sen and dividend in specie of 12 sen), translating to 16% dividend yield.

Highlights

• Results beat expectation… 4QFY15 core profit rose 22% QoQ to RM180m mainly due to improved performance from all business segments except quarry division.

• Property… EBIT improved QoQ mainly due to higher revenue from Sunway South Quay, Sunway Iskandar and Singapore projects.

• Effective property sales for 4QFY15 reached RM348m, bringing FY15 sales to RM912m, exceeding company target of RM750m.

• Its effective unbilled sales stood at RM1.5bn (1.3x of Sunway’s FY15 property development revenue). Going into 2016, Sunway targets to launch RM1.6bn worth of new projects with effective sales target of RM1.1bn (+21% YoY). Major launches in FY16 include Sunway Gandaria (RM200m), Sunway Geo Residences 3 (GDV:RM400m), Casa Kiara 3 (GDV:RM200m), Velocity (GDV:RM200m), Sunway Iskandar (GDV:RM400m) and others.

• Constru ction… SunCon was successfully listed on July 15. As at 4QFY15, the outstanding order book stands at RM3.7bn, implying a healthy cover ratio of 3x on FY15 revenue. YTD job wins currently stands at RM2.6bn, surpassing management’s target of RM2.5bn. Given its strong track record, we reckon that SunCon has a strong participating chance with jobs such as the MRT2 (RM26bn), LRT3 (RM9bn), Pan Borneo (RM16bn), DASH (RM4bn and SUKE (RM4bn), all of which are expected to be rolled out this year.

Risks

• Execution risk; Regulatory and political risk (both domestic and overseas); Rising raw material prices; and Unexpected downturn in the construction and property cycle.

Forecasts

• FY16 earnings raised by 7% after incorporated higher contribution from construction segment.

Rating

BUY

Valuation

• Maintain BUY with unchanged TP of RM3.63, based on SOP valuation.

Source: Hong Leong Investment Bank Research - 29 Feb 2016