PUBLIC INVESTMENT BANK

Transcription

1 PUBLIC INVESTMENT BANK PublicInvest Research Company Update Tuesday, May 05, 2015 KDN PP17686/03/2013(032117) UEM SUNRISE BERHAD Outperform DESCRIPTION Malaysia s largest property developer by market cap, with key landbank in Nusajaya, Johor and Mont Kiara, Kuala Lumpur. 12-Month Target Price RM2.15 Current Price RM1.29 Expected Return 67% Market Main Sector Property Bursa Code 5148 Bloomberg Ticker UEMS MK Shariah-compliant Yes SHARE PRICE CHART Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May Week Range (RM) RM1.23 RM Month Average Vol ( 000) 2,220.0 SHARE PRICE PERFORMANCE Absolute Returns Relative Returns KEY STOCK DATA Market Capitalisation (RMm) No. of Shares (m) MAJOR SHAREHOLDERS Khazanah Lembaga Tabung Haji 1M 3M 6M , ,537.4 Tan Siang Hing T F E tan.sianghing@publicinvestbank.com.my % Reengineering Growth UEM Sunrise s (UEMS) analyst briefing, which was hosted by the CEO, En. Anwar Syahrin (who joined the company in Sep 2014) was well attended by more than 20 sell-side analysts. Key takeaways were; (1) the Group reiterating the profit target of RM2bn but has a stretched target of RM2.4bn, driven by projects launches worth some RM3.7bn, and (2) absence of the usual KPIs guided previously, the CEO was looking at flat revenue growth in FY15 but eyeing an ambitious profit target of RM m, which is ahead of consensus and our estimates. Long term, the Group is looking to break RM5bn sales p.a. with RM1bn net profit in 5 years backed by its total outstanding GDV of RM103bn. All told, we keep our estimates unchanged and prefer to see the performance of the Group s launches in the next few months first before any changes. Launches worth RM3.7bn. Ongoing projects have estimated GDV of RM39bn, with c.75% of it coming for the Southern region i.e. Iskandar Malaysia. Given the difficult trading environment in Iskandar Malaysia now, the Group is looking to diversify its exposure over there via land swap arrangements and allocate c.rm1bn annually to strengthen its landbank elsewhere with focus on fast turnaround projects such as its highly successful Aurora in Melbourne Australia. For 2015, UEMS has lined up projects worth c.rm3.7bn to be unveiled in the next few months. In Iskandar, it plans to launch Estuari (landed, RM533m GDV) at Puteri Harbor and Signature Residence (landed, RM152m GDV) at Gerbang Nusajaya. Meanwhile, in the Central region, it plans to launch Serene Heights (landed, Phase 1, RM181m GDV), Mont Kiara (Condo, RM311m GDV) and Artisan Hills (Semi-Ds, RM435m GDV). As for overseas, Conservatory at Melbourne is expected to be launched by end-2015 with RM603m GDV. Beyond Other immediate projects that expected to be launched include Estuari (Ph 2 & 3, RM3.7bn GDV), The Puteri Harbor (Condo RM1.2bn GDV), high-end villas at Desaru (RM397m GDV), KLCC (RM1.2bn GDV) and a mixed development at Alderbridge, Canada (RM1.2bn GDV). Another overseas project (RM6bn GDV) that it is eyeing to unlock value is its 30.7-acre land in Durban Point, South Africa which is sea-fronting and has 15 years development period. KEY FORECAST TABLE FYE Dec (RM m) 2013A 2014A 2015F 2016F 2017F CAGR (%) Revenue 2, , , , , % Operating Profit % Pre-tax Profit % Net Profit % EPS (Sen) % P/E (x) DPS (Sen) Dividend Yield (%) Important disclaimer is provided at the end of this report. PUBLIC INVESTMENT BANK Page 1 of 5

2 Maintain Outperform but cut TP to RM2.15 (from RM2.60 previously) with c.30% discount to our RNAV after incorporating the dilutive impact from the proposed issuance of 524.4m UEMS new shares at RM1.47 to UEM Group. UEMS large tract of land (c.11k acres) has the edge of being held at low price in our view. Case in point is its Nusajaya land which is held at c.rm5.30 psf at book value, was priced at RM40psf in the recent JV with KLK. With the land cost advantage, we still believe in the Group s longer term prospects, with key rerating catalysts from strong sales and investments from reputable developers. Figure 1: GDV of Ongoing Projects Source: Company 2 Important disclaimer is provided at the end of this report. PUBLIC INVESTMENT BANK Page 2 of 5

3 Figure 2: Remaining Lanbank & GDV for Future Projects Source: Company, 3 Important disclaimer is provided at the end of this report. PUBLIC INVESTMENT BANK Page 3 of 5

4 KEY FINANCIAL DATA INCOME STATEMENT DATA FYE Dec (RM m) 2013A 2014A 2015F 2016F 2017F Revenue 2, , , , ,950.4 Operating Profit Other Gains / (Losses) Finance Costs Pre-tax Profit Income Tax Effective Tax Rate (%) Minorities Net Profit Growth Revenue (%) Operating Profit (%) Net Profit BALANCE SHEET DATA FYE Dec (RM m) 2013A 2014A 2015F 2016F 2017F Property, Plant & Equipment Cash and Cash Equivalents 1, , , ,380.3 Receivables 1, , Other Assets 6, , , , ,124.7 Total Assets 9, , , , ,612.7 Payables 1, Borrowings 1, , , , ,058.1 Retirement Benefits Other Liabilities Total Liabilities 3, , , , ,660.7 Shareholders Equity 6, , , , ,951.9 Total Equity and Liabilities 9, , , , ,612.7 PER SHARE DATA & RATIOS FYE Dec 2013F 2014A 2015F 2016F 2017F Book Value Per Share NTA Per Share EPS (Sen) DPS (Sen) Payout Ratio (%) ROA (%) ROE (%) Important disclaimer is provided at the end of this report. PUBLIC INVESTMENT BANK Page 4 of 5

5 RATING CLASSIFICATION STOCKS OUTPERFORM NEUTRAL UNDERPERFORM TRADING BUY TRADING SELL NOT RATED The stock return is expected to exceed a relevant benchmark s total of 10% or higher over the next 12months. The stock return is expected to be within +/- 10% of a relevant benchmark s return over the next 12 months. The stock return is expected to be below a relevant benchmark s return by -10% over the next 12 months. The stock return is expected to exceed a relevant benchmark s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call. The stock return is expected to be below a relevant benchmark s return by -5% or more over the next 3 months. The stock is not within regular research coverage. SECTOR OVERWEIGHT NEUTRAL UNDERWEIGHT The sector is expected to outperform a relevant benchmark over the next 12 months. The sector is expected to perform in line with a relevant benchmark over the next 12 months. The sector is expected to underperform a relevant benchmark over the next 12 months. DISCLAIMER This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad ( PIVB ). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents. This document is not and should not be construed or considered as an offer, recommendation, invitation or a solicitation of an offer to purchase or subscribe or sell any securities, related investments or financial instruments. Any recommendation in this document does not have regards to the specific investment objectives, financial situation, risk profile and particular needs of any specific persons who receive it. We encourage the addressee of this document to independently evaluate the merits of the information contained herein, consider their own investment objectives, financial situation, particular needs, risks and legal profiles, seek the advice of their, amongst others, tax, accounting, legal, business professionals and financial advisers before participating in any transaction in respect of any of the securities of the company(ies) covered in this document. PIVB, Public Bank Berhad, our affiliates and related companies, directors, officers, connected persons/employees, associates or agents may own or have positions in the securities of the company(ies) covered in this document or any securities related thereto and may from time to time add or dispose of, or may be materially interested in, any such securities. Further PIVB, Public Bank Berhad, our affiliates and related companies, associates or agents do and/or seek to do business with the company(ies) covered in this document and may from time to time act as market maker or have assumed an underwriting commitment in the securities of such company(ies), may sell them or buy them from customers on a principal basis, may have or intend to accommodate credit facilities or other banking services and may also perform or seek to perform investment banking, advisory or underwriting services for or relating to such company(ies) as well as solicit such investment advisory or other services from any entity mentioned in this document. The analyst(s) and associate analyst(s) principally responsible for the preparation of this document may participate in the solicitation of businesses described aforesaid and would receive compensation based upon various factors, including the quality of research, investor client feedback, stock pickings and performance of his/her recommendation and competitive factors. Hence, the addressee or any persons reviewing this document should be aware of the foregoing, amongst others, may give rise to real or potential conflicts of interest. Published and printed by: PUBLIC INVESTMENT BANK BERHAD (20027-W) 9 th Floor, Bangunan Public Bank 6, Jalan Sultan Sulaiman Kuala Lumpur T F Dealing Line Important disclaimer is provided at the end of this report. PUBLIC INVESTMENT BANK Page 5 of 5