1Q15 results missed our and market expectations. Maintain BUY with an unchanged MYR4.10 TP (17% upside). While new sales in 1Q were only at MYR247m, we expect sales from overseas projects to bestronger – and anticipate it to hit its MYR1.7bn target. We keep our earnings forecasts as 1H is historically weaker. Any upside to its share price would largely depend on Sunway Construction’s valuations.

• Below expectation. Sunway’s 1Q15 results were below our and marketexpectations. Both property development and property investment divisions recorded weaker QoQ growth, mainly due to slower progress billings from local projects as well as the completion of Sunway Nexis in the previous quarter while its visitors and hotel occupancy numbers were lower due to seasonal factors. Earnings from its construction unitremained resilient during the quarter.
• MYR247m of new sales in 1Q15. Sunway secured MYR247m in new sales, compared with MYR500m in 4Q14 and MYR348m in 1Q14. The amount was mainly contributed by its Velocity (MYR62m), South Quay (MYR49m and Australia (MYR28m) projects. We expect sales from overseas to come in stronger in 2H, and believe that it can meet its target of MYR1.7bn. Projects in the pipeline for this year include Sunway Damansara retail (GDV: MYR250m), South Quay condominiums (GDV: MYR300m), Sunway Iskandar landed homes (GDV: MYR300m) and Sophia Hills in Singapore (GDV: MYR600m by effective stake).
• Forecasts remain. We make no changes to our earnings forecasts as 1H is a typically weaker period. Its unbilled sales were unchanged atMYR2.5bn (same as the previous quarter) while its construction orderbook fell to MYR2.76bn from MYR3bn in 4Q14. Based on our discussion with management, its orderbook will likely be replenished soon. Hence, we are not overly concerned with the depletion.
• Maintain BUY. Our SOP-based TP is kept at MYR4.10. The potential upside to its share price will largely depend on the valuations of Sunway Construction, as higher valuations will likely translate to a higher special cash dividend paid out to Sunway shareholders. Maintain BUY.