Sunway may miss RM1.7 billion sales target

Sunway Bhd (June 5, RM3.52)

Maintain hold with unchanged target price of RM3.80: Sunway Bhd’s construction arm has been awarded a RM243.69 million contract by SA Architects for the proposed development of one block of a commercial building in Bandar Sunway for 60%-owned Sunway South Quay Sdn Bhd.

The project will be divided into two zones, with respective completion dates on Feb 28, 2017 and March 31, 2018. This marks Sunway’s first major construction order win in financial year 2015 (FY15). While it is still lagging far behind our RM2 billion order win assumption, we maintain our forecast for now as there could be more substantial order wins in the second half of FY15.

Nevertheless, its order book remains strong at RM3 billion which is 1.4 times FY15 construction revenue.

Sunway has a RM2 billion launch pipeline in FY15, of which 30% is from Sophia Hills in Singapore.

Given the weaker sentiment in Malaysia and Singapore, especially for high-end condominiums, it may be challenging for the group to hit its RM1.7 billion sales target as it only secured RM247 million property sales in the first quarter. — AllianceDBS Research

This article first appeared in The Edge Financial Daily, on June 8, 2015.