INVESTMENT HIGHLIGHTS

• Disposal of land in Canada for RM373m

• Positive on the news

• FY17 earnings estimate increased by 43% to RM240m

• Maintain NEUTRAL with higher Target Price of RM1.04

Disposal of land in Canada for RM373m: UEM Sunrise Berhad (UEMS) has announced the disposal of three parcels of freehold land in Canada for CAD113m (or RM373m). Total area is 4.90 acres and the land is located at Richmond, British Columbia Canada. Expected gain from the land disposal is RM72m and the completion date is in 3Q2017.

Positive on the news. The land disposal allows UEMS management to shift its international business focus to Australia. Note that UEMS has two ongoing projects in Melbourne (Aurora Central and Conservatory) with a third project currently in the pipeline (St. Kilda). We are positive on this as we believe that UEMS management focus on Australia market should result in more stable sales achievement and margin due to its experience in Melbourne market.

FY17 earnings estimate increased by 43% to RM240m. We have imputed the gain of disposal of RM72m into our FY17 earnings forecast.

Maintain NEUTRAL with higher Target Price of RM1.04. The deal has increased our fully diluted RNAV slightly and hence our overall Target Price is also increased to RM1.04 (from RM1.03). Valuation methodology is unchanged based on 50% discount to RNAV. Despite the positive news from the land sale, we maintain our NEUTRAL call on the stock due to unexciting property market outlook in Johor.

Source: MIDF Research - 14 Mar 2017