We adjust our fair value to MYR3.76 and maintain BUY on the stock. Our visit  to  Sunway’s  projects  in  Singapore  and  Iskandar  last  month reinforces  our  positive  view  on  the  company.  Phase  1  of  Lenang Heights  will  be  a  sellout,  and  Phase  1  of  Sunway  Iskandar  will  be  the next kicker for Sunway’s presence in the Southern region. Tan Sri Dato’ Jeffrey Cheah has hand-picked a strategic site for a show village.  
 
- Watch  out  for  Novena.  We visited Sunway’s  Arc  @  Tampines,  Sea Esta  @  Pasir  Ris  as  well  as  Novena  land  in  Singapore.  Both  Arc  and Sea  Esta  have  been  fully  taken  up.  We  expect  contribution  from Singapore to come in much stronger, as progress billings from Sea Esta will  kick  in  from  2H.  Novena  will  be  another  highly  anticipated  project. Located within the medical cluster, the site is next to Square 2 mall and the  Novena  MRT  station.  The  retail  component  is  targeted  to  be launched first in September, followed by the medical suites.

- Expect strong sales at Lenang Heights. Lenang Heights, located right next  to  Taman  Molek  and  Ponderosa  Golf  Club,  will  be  Sunway’s first project  in  Iskandar.  We  were  impressed  with  the  design  of  the  houses and the beautiful terrain of the site. 112 units of semi-ds and bungalows worth a GDV of MYR200m will be rolled out this month. We believe the project will capture many local upgraders, as modernly designed houses are limited in established housing areas in Johor Bahru.

- Sunway  Iskandar  coming  in  December.  Basic  infra  is  largely completed  on  Sunway’s land at Medini. The site chosen for a show village is strategic, as it is at a hill slope, providing a scenic view of the Straits of Johor, Pendas river and Tuas link, signaling the close proximity from  the  site  to  Singapore  and  complementing  the  low-density  and  eco concept  for  the  developments.  Ph.  1  comprising  residential  apartments and  boutique  offices  (GDV:  MYR400m-MYR500m)  will  be  launched  by end-2013, while Ph. 2 high-rise residences and Ph. 3 landed homes are slated for launch in 1H2014. Sunway’s solid track record in the education sector will also ensure the success of the education park in Iskandar.  

- Maintain  BUY  with  MYR3.76  FV.  Our  site  visit  reinforces  our  positive view on Sunway. We adjust our FV as we have overestimated the share base post-rights issue. In view of the company’s well-diversified business model,  we  lower  our  discount  to  RNAV  slightly  to  20%  (from  25% previously). Our FV is revised to MYR3.76. BUY.

Source: RHB