Sunway sets sights on record profit for 2010

PETALING JAYA: Sunway Holdings Bhd is looking to surpass the record pre-tax profit of RM180 million that it achieved more than a decade ago in its current financial year ending Dec 31, 2010 (FY10).

“For this year, we are looking at a much better improvement in earnings. Hopefully, this will be a record year for Sunway Holdings. All our divisions continue to grow,” its managing director Yau Kok Seng told reporters after its AGM here yesterday.

1996 and 1999 were Sunway’s golden years. In 1996, it posted a pre-tax profit of RM179.9 million, whereas in 1999, it totalled RM155.5 million on the back of revenue of RM799.9 million.

For FY09 (which entailed an 18-month period results), Sunway earned a net profit of RM109.8 million on the back of revenue of RM2.6 billion.

Yau said Sunway would also declare a dividend payout policy for shareholders next year, which would be announced after obtaining its board’s approval. It is learnt that management may be looking at a 20% dividend policy.

In FY08 and its 18 month-FY09, Sunway distributed 11% to 15% of its net profit, respectively, as dividends. In the previous two years, no dividend was declared due to the group recording net losses coupled with a high gearing level.

Sunway now has RM3 billion worth of contracts in hand, 70% of which are located abroad.

Going forward, the group has another RM16 billion worth of bids, out of which RM6 billion is earmarked for foreign ventures, including those in Abu Dhabi, India and Singapore, while RM10 billion relates to local projects, including those under the 10th Malaysia Plan and the government’s stimulus package.

“Overall, Sunway Holdings is targeting to win projects in excess of RM1 billion this year. Previously, our efforts were directed overseas. But in the coming years, we forsee more projects in Malaysia, including some private projects with Sunway City Bhd,” said Yau.

The group is now awaiting results on its bid for the LCCT project, and will be participating in the LRT project and Pahang-Selangor Inter-state raw water transfer project tenders.

On the international front, Sunway aims to construct an integrated city in Xuan Cheng, China, and residential buildings in Sri Lanka. The projects are in the memorandum of understanding (MoU) stage, and the feasibility studies are ongoing.

On another note, Yau also said he aimed to grow its trading and manufacturing division into one of its future core businesses. Currently, the division contributes to 13% of the group’s total earnings.

“We have a joint venture with DaeChang Forging Co Ltd of Korea, one of the world’s largest undercarriage manufacturers. This has large potential, as DaeChang Forging supplies giants such as Caterpillar, Sany and Hyundai. Hence, we can eventually become one of the world’s leading manufacturers,” he said.

Sunway holds an effective 60% stake in Sunway Daechang Forging (Anhui) Co Ltd. Sunway’s share price fell five sen to close at RM1.50 yesterday, in line with the market’s downward trend.

This article appeared in The Edge Financial Daily, June 30, 2010.

Looking for properties to buy or rent? With >150,000 exclusive listings, including undervalued properties, from vetted Pro Agents, you can now easily find the right property on Malaysia's leading property portal EdgeProp! You can also get free past transacted data and use our proprietary Edge Reference Price tool, to make an informed purchase.