17 February 2016 Corporate Update UEM Sunrise Berhad JV with MULPHA to develop Nusajaya land Maintain NEUTRAL Unchanged Target Price (TP): RM1.11 INVESTMENT HIGHLIGHTS JV with MULPHA to develop Nusajaya land (GDV: RM5.0b) Total land size of 231.35 acres Positive on the deal Earnings estimates maintained Maintain NEUTRAL with TP of RM1.11 JV with MULPHA to develop Nusajaya land. UEM Sunrise Berhad (UEMS) has entered into a 50:50 joint venture (JV) with Mulpha International Bhd (MULPHA). The purpose of the JV is to develop land in Nusajaya with GDV estimated at RM5.0b over 20 years. Total land size of 231.35 acres. We gather that the JV Company will buy in total 140.13 acres from UEMS and 91.22 acres from MULPHA. The price of the land purchase has yet to be finalised but Base Land Price (BLP) for UEMS and MULPHA land is RM315.2m and RM312.7m respectively. The purchase price will be calculated based on the relevant BLP with a 2.5% increase annually. UEMS book value for the land is RM25.4m as of end-2014. Positive on the deal. We are positive on the news as the JV should accelerate the development momentum in Gerbang Nusajaya. In the long run, the economic activities created there should result in higher land price for other land owned by UEMS in Nusajaya. Earnings estimates maintained. We expect any earnings impact to come in only from FY2018 onwards. Media has reported that Phase 1 of the project is expected to be launched in 2018 with GDV of RM150m. As a result, we maintain our FY15/FY16 net income estimates of RM218m/RM427m respectively. Maintain NEUTRAL with TP of RM1.11. Our Target Price is based on 50% discount to RNAV. Although the total return of the stock is now expected at 16.7%, we maintain our NEUTRAL view on the stock as we believe that the property sector outlook remains challenging at least in 1H2016 as Bank Negara statistics have shown that Approved Loan for Purchase Of Property has declined -18%yoy in 2015 to RM141.85b. RETURN STATS Price (16 Feb 2016) Target Price Expected Share Price Return RM0.96 RM1.11 +15.3% Expected Dividend Yield +1.4% Expected Total Return +16.7%* *see last para STOCK INFO KLCI 1664.99 Bursa / Bloomberg Board / Sector Syariah Compliant 5148 / UEMS MK Main / Properties Yes Issued shares (mil) 4537.44 Par Value (RM) 1.00 Market cap. (RM m) 4,355.94 Price over NA 0.68 52-wk price Range RM0.75 - RM1.44 Beta (against KLCI) 0.96 3-mth Avg Daily Vol 5.83m 3-mth Avg Daily Value Major Shareholders (%) RM6.36m Khazanah Nasional Bhd 66.06% Lembaga Tabung Haji 5.05% EPF 5.04% MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK Kindly refer to the last page of this publication for important disclosures
INVESTMENT STATISTICS FYE Dec FY12A FY13A FY14A FY15F FY16F Revenue 1919 2425 2662 2911 3124 Core EBIT 485 593 532 349 593 Core PBT 533 691 613 291 562 Net Income 448 577 480 235 427 Core Net Income 447 582 484 218 427 EPS (sen) 10.36 13.27 10.58 5.17 9.42 Core EPS (sen) 10.32 13.39 10.67 4.81 9.42 Net DPS (sen) 3.00 4.00 3.00 1.35 2.60 Net Dvd Yield 3.1% 4.2% 3.1% 1.4% 2.7% Core PER 9.3 7.2 9.1 18.6 10.2 NTA/share (RM) 1.08 1.31 1.27 1.30 1.36 P/NTA 0.88 0.73 0.76 0.74 0.70 Core ROE 8.4% 8.9% 7.6% 3.3% 6.2% Core ROA 5.0% 5.9% 4.4% 2.0% 3.7% Source: Company, MIDF Research Forecast LOCATION OF THE LAND (ENT1 and ENT2 owned by UEMS; LFC Land owned by MULPHA) 2
UEMS RNAV Landbank/Buildings Location Remaining GDV (RM m) Methodology Stake Value (RM m) Ongoing Projects East Ledang Nusajaya, Johor 1672 Nusa Idaman Nusajaya, Johor 942 Nusa Bayu Nusajaya, Johor 574 Imperia Nusajaya, Johor 338 Teega Nusajaya, Johor 1152 Almas Non-Nusajaya 258 Symphony Hills Non-Nusajaya 1098 Summer Suites & VOS Non-Nusajaya 427 Arcoris (Phase 1-3) Non-Nusajaya 727 Residensi 22 Non-Nusajaya 843 Others - MK10, MK28, MK11 Ledang Heights, NIP (Ph 2), Quintet Non-Nusajaya 3698 Melbourne, Australia Non-Nusajaya 1658 Aurora Serviced Apartments Non-Nusajaya 371 10% 100% 180.7 10% 100% 101.8 10% 100% 62.0 10% 100% 36.5 10% 100% 124.5 10% 100% 27.9 10% 100% 118.7 10% 100% 46.1 10% 100% 78.6 10% 100% 91.1 10% 100% 399.7 10% 100% 179.2 10% 100% 56.4 Pipeline Projects Size (ac) Size (Sq ft) Price (RM/sqft) Stake Value (RM m) Gerbang Nusajaya Nusajaya, Johor 3232 140,785,920 35 100% 4955.7 D'Estuary Nusajaya, Johor 394 17,162,640 44 100% 755.2 R10/R11(affordable segment) Nusajaya, Johor 137 5,959,008 12 100% 71.5 Almas @ Puteri Harbour Nusajaya, Johor 12 531,432 334 100% 177.5 Residential South Nusajaya, Johor 208 9,047,412 36 80% 260.6 CS3 - Puteri Harbour Nusajaya, Johor 7 291,852 334 50% 48.7 Emerald Bay Nusajaya, Johor 111 4,835,160 234 40% 452.2 Eco Industrial Park Nusajaya, Johor 519 22,607,640 36 40% 325.6 Motorsports City Nusajaya, Johor 300 13,068,000 36 30% 141.1 Sinaran Hills Kajang, Selangor 65 2,831,400 45 100% 127.4 Angkasa Raya Kuala Lumpur 2 69,696 2,502 100% 174.4 Serene Heights Bangi, Selangor 449 19,541,016 20 100% 390.8 Floresta - Solaris 3 Mont Kiara, KL 19 814,572 144 62% 72.7 Desaru Nusajaya, Johor 679 29,564,172 31 51% 471 3
Catalyst Development Puteri Harbour Nusajaya, Johor 68 2,979,504 334 100% 995 SiLC Nusajaya, Johor 207 9,008,208 35 100% 315 Afiat Healthpark (Hospital) Nusajaya, Johor 43 1,886,148 35 100% 66 JV with KLK Gerbang Nusajaya Nusajaya, Johor 500 21,780,000 40 40% 348 Kulai Johor 2500 108,900,000 8 60% 523 Solaris Dutamas Building (Retail + Carparks) Jalan Dutamas, KL 37 1,612,543 700 100% 1129 Mont Kiara (Carparks) Mont Kiara, KL 5800 units 20,000 100% 116 Batang Padang (Agriculture land) Perak 2398 104,469,210 2.3 100% 240 Total Landbank Value 13660. 0 Investment Properties 585.1 Fixed Assets 234.9 Cash 899.3 Total Liabilities (excl. deferred tax liabilities) Total RNAV (RM m) -4238.5 11140. 7 No of shares (m) 4537.4 Maximum conversion from RCPS into UEMS shares 495.6 Total No of shares including RCPS maximum conversion 5033.0 RNAV per share (RM) 2.21 Discount 50% Target Price (RM) 1.11 Source: Company, MIDF Research Forecast DAILY PRICE CHART Alan Lim, CFA alan.lim@midf.com.my 03-2173 8464 Source: Bloomberg 4
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X). (Bank Pelaburan) (A Participating Organisation of Bursa Malaysia Securities Berhad) DISCLOSURES AND DISCLAIMER This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for distribution only under such circumstances as may be permitted by applicable law. Readers should be fully aware that this report is for information purposes only. The opinions contained in this report are based on information obtained or derived from sources that we believe are reliable. MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or implied, as to the accuracy, completeness or reliability of the information contained therein and it should not be relied upon as such. This report is not, and should not be construed as, an offer to buy or sell any securities or other financial instruments. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. All opinions and estimates are subject to change without notice. The research analysts will initiate, update and cease coverage solely at the discretion of MIDF AMANAH INVESTMENT BANK BERHAD. The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have interest in any of the securities mentioned and may benefit from the information herein. Members of the MIDF Group and their affiliates may provide services to any company and affiliates of such companies whose securities are mentioned herein This document may not be reproduced, distributed or published in any form or for any purpose. MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS STOCK RECOMMENDATIONS BUY TRADING BUY NEUTRAL SELL TRADING SELL Total return is expected to be >15% over the next 12 months. Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been assigned due to positive newsflow. Total return is expected to be between -15% and +15% over the next 12 months. Total return is expected to be <-15% over the next 12 months. Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been assigned due to negative newsflow. SECTOR RECOMMENDATIONS POSITIVE NEUTRAL NEGATIVE The sector is expected to outperform the overall market over the next 12 months. The sector is to perform in line with the overall market over the next 12 months. The sector is expected to underperform the overall market over the next 12 months. 5