• Disposal of 4.9-acre land in Richmond City, Canada for CAD$113m (~RM372.6m)

• Focusing on property market in Malaysia and Australia

• Maintain Hold and RM1.10 TP

What’s New

UEM Sunrise (UEMS) announced that it has entered into an agreement with a company related to the established South Street Development Group in Canada to dispose of 4.9 acres of land in the City of Richmond, Canada for CAD$113m (~RM372.6m), translating into CAD$529 per square foot (psf). The proposed land disposal is expected to be completed by 3Q17.

UEMS acquired the land in Apr 2014 for CAD$70.2m (~RM208.5m) at CAD$329psf, and the proposed disposal is expected to result in disposal gains of RM72m. This marks UEMS’ exit from the Canada property market,and it will focus on the property markets in Malaysia and Australia. The disposal proceeds will be mainly utilised for UEMS’ working capital requirements.

There is no change to our earnings forecast for now pending the completion of the proposed land disposal within 3Q17. We maintain our HOLD call for UEMS with RM1.10 TP, based on a 70% discount to our RNAV. About 75% of UEMS’ 13k acres of remaining land bank is concentrated within Iskandar Malaysia, and the group may not be able to monetise the deep value of its land there anytime soon given the weak sentiment towards Iskandar Malaysia properties.

Source: Alliance Research - 14 Mar 2017