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Thursday, September 19, 2013

Sunway JV in S'pore to contribute from 2016


PETALING JAYA: Sunway Bhd’s latest joint venture (JV) in Singapore with its “old” partners - Hoi Hup Realty Pte Ltd and SC Wong Holdings Pte Ltd - is expected to contribute meaningfully to earnings only from financial year 2016 onwards, according to Maybank IB Research.

“The new project in Singapore is expected to churn out a net profit of RM19mil per annum or 1.1 sen earnings per share,” it said in a report.

Sunway’s wholly owned subsidiary Sunway Developments Pte Ltd, along with Hoi Hup Realty and SC Wong Holdings, has been awarded 2.38ha on a 99-year lease term at RM1.13bil in Mount Sophia, Singapore.

Sunway owns 30% of the consortium, while Hoi Hup Realty and SC Wong Holdings have 51% and 19%, respectively.

Mount Sophia is located in a prime area and is close to the Dhoby Ghaut MRT station. The consortium plans to build low-rise condominium units. Analysts are positive on the land acquisition due to its strategic location and “reasonable price”.

According to Maybank, the consortium’s bid was about 0.06% above the second-highest bid of RM3,108 per square foot.

“Based on the transaction cost, the land cost-to-gross development value (GDV) ratio of 55% seems fair to us, given that land typically makes up 40% to 60% of GDV in Singapore,” it said.

It is learnt that the transaction represents Sunway’s ninth development in Singapore and the eighth JV with Hoi Hup Realty.

“This is the largest residential undertaking by Sunway with a GDV of RM2.06bil,” said Hong Leong Investment Bank Research.

The research house called it a “timely win” for Sunway, as its SeaEsta@Pasir Ris condominium development at an RM922.5mil GDV is fully sold, and its Novena medical suites, with a GDV of RM2.35bil, will be launched in the later part of the year.

“With Sophia, it would provide earnings continuity in Singapore,” it said, adding that the group’s unbilled property sales in Singapore stood at RM636mil, representing 35% of its overall effective unbilled sales as of the first half of financial year 2013.

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