KUCHING: Sunway Bhd’s (Sunway) property sales for the full financial year 2014 (FY14) is expected to outperform analysts’ expectations.
The research arm of Affin Investment Bank Bhd (Affin Research) in a report said the company’s property sales remains buoyant in the first half of 2014 (1H14).
Affin Research observed that Sunway registered new property sales of RM620 million, an increase of 26 per cent year-on-year (y-o-y) in 1H14 driven by strong take-up for both the company’s new launches and older projects.
The research firm noted new launches contributed RM435 million to the property sales of the company in 1H14. Sunway’s 1H14 property sales were generated from various projects in different locations.
The research firm noted sales generated from its various projects were in line with the company’s strategy to pursue multiple launches at high demand locations.
Affin Research pointed out that key projects that contributed to Sunway’s property sales were Sunway Velocity (RM156 million); Geo Residences (RM68 million); Sunway Montana (RM71 million); Penang (RM70 million); Johor (RM27 million) and projects in Singapore (RM77 million).
Sunway’s maiden project in Medini Iskandar, Johor called the Medini Citrine offices comprising167 units for RM73 million was sold out.
The research firm noted the Citrine offices were launched on July 20 and have since achieved 100 per cent booking rate.
Given the strong take-up for Citrine offices, Affin Research believed Sunway will soon launch its 328-units Citrine service apartments measuring 618 square feet to 1,571 square feet at the price of RM800 per square feet to RM900 per square feet.
The research firm noted that Sunway will also launch its landed homes located within Medini’s Lakeview precinct in the first half of 2015 (1H15).
As for Sunway group’s property sales in the Klang Valley, Affin Research said the group has received 70 per cent booking for the RM210 million Geo Service Apartments which was launched in July 20 and 62 per cent take up rate for the RM270 million V Residence 2.
In the meantime, Affin Research observed that Sunway group’s property sales in the second quarter of 2014 (2Q14) were 56 per cent higher quarter-on-quarter (q-o-q) at RM378 million compared with RM242 million recorded in 1Q14.
On another note, Affin Research said Sunway group’s construction segment has had a slow start in FY14, securing about RM178 million worth of contracts year-to-date.
The research firm observed that the company’s weak 1H14 construction order book replenishment was due to a lack of major contract awards, especially the infrastructure and building construction jobs in the Klang Valley.
Therefore, the research firm expects the pace of contract awards for Sunway to pick up in 2H14.
Affin Research believed Sunway’s solid track record in both infrastructure works and building developments will enable the group to clinch some of the upcoming construction jobs.
Thus, the research firm estimated for Sunway to be awarded some RM2 billion worth of construction works in FY14.
As a whole, Affin Research expects Sunway’s property division to perform strongly in FY14, raising its property sales projection 2014 and 2015 by 15and 18 per cent to RM1.2 billion and RM1.3 billion respectively.
At the same time, the research firm also upgraded the fair value of the company to RM3.30 per share.