Sunway-Hoi Hup JV wins bid for Singapore’s Flynn Park en-bloc acquisition on 4.79 acres of freehold plot of land located at Pasir Panjang Singapore for a bid of SGD371m (approximately RM1.15bn). We are mildly positive as the group’s effective GDV is expected to inch up by only c.2% to RM38.2bn with the proposed development. The implied acquisition cost is c.SGD 1,355 psf, represents a discount of 24% over current selling price of private condominium Ki Residences of Singapore, which we deemed fair since there will be extra cost to demolish the existing condominium s and re-develop into modern private residential condominiums. We maintain our forecast and BUY call with an unchanged TP of RM2.58 based on SOP-derived valuation.

NEWSBREAK

Sunway Berhad, through its joint venture vehicle with Singapore developer, Hoi Hup Realty Pte Ltd (30:70) has won a competitive bid for the en-bloc acquisition of Flynn Park, a private condominium development located on Yew Siang Road, Pasir Panjang Singapore for a bid of SGD371m (approximately RM1.15bn). The existing private condominiums block at Flynn Park, Pasir Panjang Singapore, sits on an elevated 4.79 acres of freehold plot of land. The land is located 350m from the Pasir Panjang MRT station on the Circle Line and adjacent to matured nature parks in its vicinity. It is also close to landmarks such as Mapletree Business City, Vivocity and Sentosa Island. Sunway Property and Hoi Hup intends to re-develop the site into modern private residential condominiums, leveraging on the multiple strength of its location which is on a hillside, at the fringe of the city centre, next to public transportation and yet next to the lush and mature Kent Ridge nature park.

HLIB’S VIEW

Mildly positive. We are mildly positive as the group’s effective GDV is expected to inch up by only c.2% to RM38.2bn with the proposed development. The implied acquisition cost is c.SGD 1,355 psf, represents a discount of 24% over current selling price of private condominium Ki Residences in District 21 (Clementi Park/ Upper Bukit Timah) of Singapore, which we deem fair since there will be extra cost to demolish the existing condominium and re-develop into modern private residential condominiums.

Gearing impact. Gearing will remain largely unchanged at 0.57x (as of 2Q21) since it's a JV company and Sunway only have 30% stake in the JV.

Forecast. Maintain our forecast pending more details of the developments. We maintain our BUY call with an unchanged TP of RM2.58 based on SOP-derived valuation. Sunway remains our top pick given its well-integrated property, construction and building material operations. With its wide ranging business exposure, the group is a good proxy to the eventual economic recovery. Meanwhile, its efforts to expedite expansion of healthcare with its new strategic partner GIC, will culminate in the separate listing of healthcare unit to help unlock value in the group.

Source: Hong Leong Investment Bank Research - 14 Sept 2021