INVESTMENT HIGHLIGHTS

• Management sales target at RM1.1b for FY17

• Management sales target is slightly lower than our sales target of RM1.3b

• Earnings forecast revised marginally

• Maintain NEUTRAL with unchanged TP of RM3.25

Management sales target at RM1.1b for FY17. Sunway Berhad (SUNWAY) has set its sales target for FY17 at RM1.1b on the back of target property launches of RM2b. For FY17, management plans to launch property projects in several regions namely South Quay, Kelana Jaya, Penang, Johor, and China. The RM1.1b of sales target for FY17 implies flattish yoy property sales for SUNWAY as management is confident of hitting sales target of RM1.1b for FY16. We understand that bulk of SUNWAY’s property sales in FY16 were from its projects in Klang Valley and Johor.

Management sales target is slightly lower than our sales target of RM1.3b. Management sales target of RM1.1b is lower than our in-house sales target of RM1.3b for FY17. We think that the flattish sales target set by management was due to the cautious sentiment on the property sector despite projects with massive GDV of RM2b will be launched in FY17. Correspondingly, we are revising our FY17 sales target for SUNWAY to RM1.1b from RM1.3b, in line with management sales target.

Earnings forecast revised marginally. Our earnings forecast for FY17 was nudged down marginally by 0.4% following the downward revision in sales target for FY17. Overall, earnings impact is minimal as earnings contribution from property sales in FY17 is expected to be minimal due to low progress billing. Meanwhile, we maintained our earnings forecast for FY16 and introduce our earnings forecast for FY18.

Maintain NEUTRAL with unchanged TP of RM3.25. We maintain our Target Price of RM3.25, based on sum-of-parts valuation due to minimal impact on earnings in the near term from the revision in sales target. Outlook for SUNWAY remains neutral given the lack of catalyst and also due to the subdued outlook for property market.

Source: MIDF Research - 9 Jan 2017