KUCHING: Sunway Bhd (Sunway) aims to achieve RM1.4 billion of property sales in financial year 2016 (FY16).
Following a company briefing, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) in a report yesterday said the property launches of Sunway for this year will be spreaded across multiple geograhical locations.
The research firm observed the locations include properties in Iskandar Johor, Ipoh, Mon’t Kiara-Kuala Lumpur, Bangi-Selangor, South Quay-Selangor and Jalan Peel, Cheras-Kuala Lumpur.
MIDF Research noted the RM1.4 billion sales target is 40 per cent higher than the company’s sales target of RM1 billion for FY15.
Having said that, it remains more conservative on the company’s sales target whilst forecasting an amount of RM1.1 billion for Sunway’s sales in FY16.
The research firm believed the outlook for the property sector will remain cautious this year.
This comes as loan application for the purchase of property in the first ten months of last year declined by seven per cent year-on-year (y-o-y) to RM253.88 billion, which implied lower demand.
At the same time, the reseach firm has also maintained its earnings projection for Sunway for FY15 and FY16.
Due to the challenging outlook for the property market, MIDF Research opined that it offers limited growth catalysts to Sunway.
Despite that, the research firm believed a better outlook for Sunway’s construction division, Sunway Construction Group Bhd is expected to provide a buffer against a more muted performance of its property division.
In the meantime, the research firm gathered that Sunway is confident of reaching the sales target of RM1 billion for FY15 as the company’s sales for nine months of 2015 was RM734 million or 73 per cent of the research firm’s target for FY15.
Hence, MIDF Research maintained its ‘neutral’ rating on the company with a fair value of RM3.20 per share for the valuation of Sunway’s share price.