• Maintain BUY and MYR1.60 TP, 65% upside. UEM Sunrise’s 3Q24 results are in line. Earnings strengthened, driven by higher billings and land disposals. Due to a slew of successful launches in Iskandar Malaysia, 9M24 property sales totalled MYR928.5m, and the latest numbers have surpassed management’s MYR1bn target for the year. UEMS remains the best proxy for the multi-year growth story in Iskandar Malaysia, and the company will likely leverage on the upcoming announcement of incentives for the JohorSingapore Special Economic Zone to roll out more exciting projects ahead.

• 3Q24 results. The growth in revenue and earnings was primarily driven by higher billings and property sales, as well as land disposals that amounted to MYR112.5m. Its GPM, however, narrowed to 31% from 35% in the previous quarter, as savings from finalised project costs decreased during the quarter. Meanwhile, the company’s share of profits from JVs and associate companies also increased QoQ, due to better sales as well as lower finance costs. Net gearing remained at 0.43x.

• Sales spiked up in 3Q24. 3Q24 property sales hit MYR426m, ie substantially higher from MYR269.8m in 2Q24, as UEMS ramped up its project launches during the quarter. While 9M24 new sales totalled MYR928.5m, the latest property sales have already surpassed management’s MYR1bn target for the year. In 3Q24, the company rolled out MYR808m worth of projects in Iskandar Malaysia (exceeding its target for the year). These include Aspira Hills Phase 1 (GDV: MYR313m), Aspira LakeHomes 4, 5 and 6 (GDV: MYR230m) and DiReka Square shops (GDV: MYR249m). All units at Aspira Hills and DiReka Square are now fully booked or sold. We expect a portion of these sales to flow through to its 4Q24 and 1Q25 books. Sales for existing projects were encouraging, and pointed to an improvement. Take-up rates forThe Minh roseto 68%in 3Q24(2Q24:58%), while that for The Connaught One increased to 50% (2Q24: 42%), and Residensi ZIG, to 33% (2Q24: 19%).

• Forecasts. We maintain our earnings forecasts as some disposal of non-core land and retail assets can be concluded in 4Q24. The disposal of 11.7ha of land in East Ledang for MYR144.9m (estimated gain of MYR20m) may, however, take longer and be completed only in late 2025. Given the robust property sales in 3Q24, UEMS’ unbilled sales increased to MYR2.89bn from MYR2.72bn in 2Q24.

• No change to our TP. Our TP is based on 25% discount to RNAV, with a 2% ESG discountimputed, as our ESG score of 2.9 is one notch below the country median.

Source: RHB Securities Research - 22 Nov 2024