Sunway City Berhad (Inter-Pacific Research) outperform; target price RM 4.70

Acquiring land in Penang


• Valuation: Completion of the acquisition will increase its presence in Penang by raising its total GDV in Penang Island to RM1.12bn from RM323mn prior to the acquisition. We are maintaining our forecast pending completion of the acquisition as well as the launching date for the project. Our fair value is pegged at RM4.70 based on a PER of 12x and EPS of 39sen. Our target price is 28% discount from the estimated RNAV per share of RM6.51. We recommend Outperform.

• Sunway City acquiring freehold land worth RM38.7mn: SunCity had engaged into S&P with Sungai Ara Holdings SB to acquire a freehold land measuring 32.74 hectares for a total cash consideration of RM 38.7mn which translate into RM11 translates psf. We believe the acquisition price of RM11psf is attractive in Penang Island, more so with the land strategically located within the South rategically South-West of Penang Island and surrounded by matured township consisting of Rain Tree Garden, Regency Heights, Vistaria Apartment and Sunrise Garden, etc in Sungei Ara and Garden, Suncity's Suncity existing Sunway Merica project.

• GDV of RM800mn: The proposed development for the land comprises of 351 units’ residential houses mainly semi-detached houses and bungalow The units detached bungalow. selling price will be between RM550-RM700psf generat RM700psf generating total GDV of RM800mn. Located at the south western part of Penang Island adjacent to the Bayan Baru Township, it is approximately 4km from Penang International Airport pproximately and about 15 minutes drive to the new Penang Second Link Bridge currently under construction. We believe the future development would benefit from the expansion of Penang Airport as well as the new Penang Second link bridge.

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