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UEM SUNRISE
(UEMS MK EQUITY, ULHB.KL) 15 Oct 2019
Investment Highlights
Price RM0.67
Fair Value RM0.80
52-week High/Low RM1.02/RM0.62
We maintain our BUY recommendation on UEM Sunrise
(UEMS) with a lower fair value of RM0.80 (from RM0.81) based
Key Changes on a discount of 45% to its RNAV (Exhibit 1). We cut our
Fair value FY19–21 earnings forecasts by 12%, 15% and 16%
EPS respectively to reflect the timing of recognition.
YE to Dec FY18 FY19F FY20F FY21F During a recent meeting, management updated us on its
latest development. UEMS’ new high-rise township project in
Revenue (RM mil) 2,044.0 2,080.1 2,143.5 2,115.2 Kepong, namely Kiara Bay, will be the key highlight for FY20
Core net profit (RM mil) 318.1 233.1 179.0 170.7 and beyond. Situated on a 72.73-acre of leasehold land via a
FD Core EPS (sen) 7.0 5.1 3.9 3.8 50:50 JV with Mega Legacy Equity SB, the project is adjacent
FD Core EPS growth (%) 201.3 (26.7) (23.2) (4.6) to Kepong Metropolitan Park. The JV plans to develop a
Consensus Net Profit (RM mil) - 246.8 187.2 174.4 mixed residential and commercial development with an
DPS (sen) 1.0 1.0 1.0 1.0 estimated GDV of RM15bil over a 15-year period.
PE (x) 9.6 13.0 17.0 17.8
EV/EBITDA (x) 12.3 12.8 16.4 15.6 Management is targeting Kiara Bay’s maiden launch in late
Div yield (%) 1.7 1.7 1.7 1.7 4QFY19, featuring two towers of serviced residences (870
ROE (%) 4.5 3.2 2.4 2.3 units) priced between RM500K and RM900K per unit with an
Net Gearing (%) 50.8% 38.7% 36.9% 32.1% estimated GDV of RM656mil. We expect the project to be well-
received given its strategic location along the MRR2 (within
Stock and Financial Data 5km from DUKE, NKVE and LDP) and a growing young
population in that area.
Shares Outstanding (million) 4,537.4
Market Cap (RM mil) 3,040.1 Meanwhile in Australia, the SP4, SP5 and Ascendas bloc
Book Value (RM/share) 1.58 (remaining GDV A$638.7mil) of Aurora Melbourne Central are
P/BV (x) 0.4 completed with full settlement by the end of 2019. In
ROE (%) 1.6 September 2019, UEMS and A-HTrust mutually terminated the
Net Gearing (%) 50.8% contract of selling the 252 units of serviced apartment
(Ascendas bloc) within its Aurora Melbourne Central to A-
Major Shareholders Khazanah Nasional 66.1% HTrust at A$120mil following the disagreement on
Urusharta Jamaah 7.7% specifications of certain aspects relating to the property. The
EPF 5.1% mutual termination will allow UEMS to seek and explore other
Free Float 21.1% opportunities that are more beneficial to the group. UEMS is
Avg Daily Value (RM mil) 0.72 currently evaluating the proposals with a target to conclude
the sale transaction at more than A$120mil. Management
Price performance 3mth 6mth 12mth
noted the deal to be completed by the end of the year, hence
Absolute (%) (17.0) (18.5) (8.7) expects revenue to be recognized in 4QFY19.
Relative (%) 2.9 (10.4) 4.0 The handing over of the Australian projects will also reduce
the company’s net gearing from 50% to below 40% by the end
1.40 1,900 of FY19. Beyond that, we believe the outlook for UEMS
1.30 1,850 remains stable premised on its unbilled sales of local projects
1.20 1,800 amounting to RM947mil which will provide earnings visibility
1.10 1,750 for FY20. Furthermore, UEMS is in talks with several parties to
1.00 1,700 dispose of sizeable amount of its landbank to unlock cash.
0.90 1,650
The sales of local properties in general are still slower than
0.80 1,600 expected. Hence we cut our FY19, FY20 and FY21 earnings
0.70 1,550 forecast by 12%, 15% and 16% respectively to reflect the
0.60 1,500 timing of recognition. Our fair value is reduced to RM0.80
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UEMS is keeping its GDV target of RM1.2bil for 2019. Year to date, UEMS has launched projects with GDV worth
over RM318mil locally. Aspira ParkHomes (phases 1 & 2) in the southern region, which were launched in January
and June respectively, saw take-up rates of more than 70% and 50% respectively while the recent Aspira Square
(commercial) in August has recorded take-up rates of more than 50%. In the central region, over 40% of the units in
Dahlia Phase 2 in Serene Heights, Bangi have been sold since its launch in May 2019. The remaining RM880mil,
including the RM656mil Kiara Bay project is targeted to be launched by 4Q19.
Total 1,402.2
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