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SunCity (RM3.90; Buy; Price Target: RM5.10; SCITY MK)
Sealing second venture in China
SunCity has signed a collaboration agreement with Sino-Singapore Tianjin Eco-City Investment and Development Co(SSTEC) to jointly develop 102 acres in Tianjin Eco-City in China. This was within the stipulated 6 months period following an MOU entered between both parties in Oct 09. The RMB5b project will be the first-of-its-kind LOHAS (Lifestyle of Health and Sustainability) development, to be carried out in 3 stages over 5 years with the earliest commencement in Mar 2011 and expected completion in mid-2015. Land injection is conditional upon SSTEC obtaining the necessary approvals.
This marks SunCity’s second venture in China after it teamed up with parent Sunway Holdings in Jun 08 to set up Sunway Real Estate China Ltd (60:40) which entered into a 65:35 JV with Shanghai Guanghao Real Estate Property Ltd to develop a 17-acre mixed development project (GDV RM473m) in Jiangyin (1.5 hours west of Shanghai). SunCity is targeting for 30% contribution to revenue from overseas projects by 2015(vs <5% currently).
Based on a back on the envelope calculation assuming 60% stake and 20% PBT margin, the project is expected to boost SunCity’s earnings and RNAV by RM90m p.a. (EPS: 19sen; +48%) and 63sen/share (+12%) respectively. Impact in the short-term should be minimal as margin will likely be thin given attractive introductory selling prices and start-up costs.
Estimated RMB5b GDV assumes ASP starting from RMB1,068psf for residential and RMB1,208psf for commercial. Maintain Buy, RNAV-based TP raised to RM5.10 from RM4.70 previously. Background: SSTEC, a 50:50 JV between Chinese Consortium led by Tianjin Economic-Technological Development Area (TEDA) and China Development Bank; and Singapore Consortium led by Keppel Group, is the master developer for the 7400-acre Tianjin Eco- City (TEC).
TEC is a government-to-government mixed development project (between China and Singapore) aimed at creating a model ecologically and socially sustainable environment for residents (targeting 110k homes for 350k people over next 10-15 years). Phase 1 has attracted international developers such as China’s Shimao Group, Japan's Mitsui Fudosan, Taiwan's Farglory Group and Singapore's Keppel Land.
TEC is located within:
- 10km or 8 minutes from TEDA which MNCs such as Motorola, Toyota, Nestle and Samsung have set up plants,
- 50 km or 50 minutes from Tianjin city centre, and
- 150 km or 2 hours from Beijing. Tianjin is the sixth largest city in terms of urban population in China with 11m and GDP per capita of US$9000. Tianjin is one of China's major manufacturing hub, international port city and economic centre of the Bohai Sea region/ North of China. It is also houses Tianjin Binhai New Area (part of the 11th 5-year Plan for the development of China national economy) and Tianjin Economic-Technological Development Area.
Sealing second venture in China
SunCity has signed a collaboration agreement with Sino-Singapore Tianjin Eco-City Investment and Development Co(SSTEC) to jointly develop 102 acres in Tianjin Eco-City in China. This was within the stipulated 6 months period following an MOU entered between both parties in Oct 09. The RMB5b project will be the first-of-its-kind LOHAS (Lifestyle of Health and Sustainability) development, to be carried out in 3 stages over 5 years with the earliest commencement in Mar 2011 and expected completion in mid-2015. Land injection is conditional upon SSTEC obtaining the necessary approvals.
This marks SunCity’s second venture in China after it teamed up with parent Sunway Holdings in Jun 08 to set up Sunway Real Estate China Ltd (60:40) which entered into a 65:35 JV with Shanghai Guanghao Real Estate Property Ltd to develop a 17-acre mixed development project (GDV RM473m) in Jiangyin (1.5 hours west of Shanghai). SunCity is targeting for 30% contribution to revenue from overseas projects by 2015(vs <5% currently).
Based on a back on the envelope calculation assuming 60% stake and 20% PBT margin, the project is expected to boost SunCity’s earnings and RNAV by RM90m p.a. (EPS: 19sen; +48%) and 63sen/share (+12%) respectively. Impact in the short-term should be minimal as margin will likely be thin given attractive introductory selling prices and start-up costs.
Estimated RMB5b GDV assumes ASP starting from RMB1,068psf for residential and RMB1,208psf for commercial. Maintain Buy, RNAV-based TP raised to RM5.10 from RM4.70 previously. Background: SSTEC, a 50:50 JV between Chinese Consortium led by Tianjin Economic-Technological Development Area (TEDA) and China Development Bank; and Singapore Consortium led by Keppel Group, is the master developer for the 7400-acre Tianjin Eco- City (TEC).
TEC is a government-to-government mixed development project (between China and Singapore) aimed at creating a model ecologically and socially sustainable environment for residents (targeting 110k homes for 350k people over next 10-15 years). Phase 1 has attracted international developers such as China’s Shimao Group, Japan's Mitsui Fudosan, Taiwan's Farglory Group and Singapore's Keppel Land.
TEC is located within:
- 10km or 8 minutes from TEDA which MNCs such as Motorola, Toyota, Nestle and Samsung have set up plants,
- 50 km or 50 minutes from Tianjin city centre, and
- 150 km or 2 hours from Beijing. Tianjin is the sixth largest city in terms of urban population in China with 11m and GDP per capita of US$9000. Tianjin is one of China's major manufacturing hub, international port city and economic centre of the Bohai Sea region/ North of China. It is also houses Tianjin Binhai New Area (part of the 11th 5-year Plan for the development of China national economy) and Tianjin Economic-Technological Development Area.
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