UEM Sunrise’s (UEMS) 2QFY22 net profit came in at RM20.7m, building on the earnings momentum from the first quarter, mainly due to the sale of non-strategic land in Mersing and Iskandar Puteri. This is also coupled with higher property development revenue of local projects that are in the advanced stages of their development cycles, and sale of inventories. In 1HFY22, Group net profit of RM39.7m was within our expectations but surpassed consensus at c. 53% and 119% of respective full-year estimates. Pre-sales secured in 1HFY22 were at RM439m. Separately, unbilled sales of RM2.3bn as at 30 June 2022 will be substantially recognised over the next 18 to 36 months. UEMS is maintaining its sales and GDV targets of RM1.5bn and RM3.3bn, respectively for FY22 meanwhile. We keep our earnings unchanged and maintain our Neutral call with TP unchanged at 33sen.

• 1HY22 revenue rose 56% YoY to RM781m partly due to the sale recognition of the 19 industrial plots in SiLC and the sale of non strategic land that contributed 30% of the Group's total revenue. Property development revenue contributions were from projects such as Residensi Solaris Parq, Serene Heights and Residensi AVA in the Central region and Aspira ParkHomes, Senadi Hills and Estuari Gardens in the Southern region. Correspondingly, the Group recorded profit after tax of RM40m as compared to a loss after tax of RM12m a year ago.

• Eyeing RM3.3bn in new projects. UEMS is eyeing FY22 sales target of RM1.5bn, with plans to launch projects worth RM3.3bn. This includes activating the 1.3-acre site in Collingwood, Melbourne into a mixed-development project with an estimated GDV of A$250m (RM735m). For 2H2022, the Group is planning to unveil new phased launches of existing projects, namely Serene Heights Bangi as well as Senadi Hills and the Aspira-themed products in Iskandar Puteri. It is also planning to launch a new mixed-use transit-oriented development on the 6.86-acre land adjacent to the Taman Connaught MRT station in Cheras and a new mixed integrated high rise development in Mont’Kiara (MK 31).
  Property sales in 1HFY22 was RM439m, with 57% from Central region projects, 39% from Southern region and the remaining 4% was from Conservatory in Melbourne; unsettled units which were re sold to replacement buyers.

Source: PublicInvest Research - 25 Aug 2022