Apr 29, 2010

SUNWAY Holdings - Reiterate BUY

Sunway Holdings (RM1.54; Buy; Price Target: RM1.95)
3rd land acquisition in 2010
Sunway had on 28 April 2010, entered into a Sale and Purchase Agreement with Equine Capital for the proposed acquisition of leasehold land in Taman Equine, Bandar Putra Permai Selangor measuring 33.37 acres for a total cash consideration of RM37.8m.

The land cost works out to be RM26 psf which we think is fair. The estimated GDV is RM250m, implying a GDV/acre of RM7.5m. We understand the development will be high-end in nature comprising residential units of exclusive semi-detached houses and bungalows which will be launched in 2011. Assuming conservative pretax margins of 15%, this project can potentially contribute 3.3 sen in EPS. We are leaving our forecasts unchanged for now. With this acquisition, Sunway’s total landbank is now 440 acres with a GDV of RM2.2bn.

According to the announcement, the land is strategically located in Taman Equine, close to the mature townships of Puchong, Bandar Sunway and Petaling Jaya and easily accessible via several major roads and highways including the Lebuhraya Damansara-Puchong (LDP) and Maju Expressway. Other notable amenities nearby include a premier international school, Alice Smith, Universiti Putra Malaysia and various hypermarkets including Giant and Jusco. 

This is Sunway’s third land bank acquisition locally which will complement its 3 Singapore projects. Reiterate BUY with a SOP-based TP of RM1.95.

by HWDBS Vickers