Sunway (BUY) - A good year

Sunway (BUY)

A good year

• FY11 posted core earnings of RM325m (25.2 sen/share) beating ours and streets’ estimates by 8% and 7% respectively.
• Results review… 4Q core earnings came as a positive surprise, growing by 6% QoQ to RM99.3m.
• Red in China… On the other hand, the Group’s China operations suffered losses mainly for its property development in Jiangyin.
• EI… During the quarter, there was a total EI gain of RM24.5m whereby the majority of it was for +RM30.9m revaluation gain in property investments and -RM5.3m reversal of taxation.
• Strong Singapore sales… Achieved new property sales of RM784m during the quarter compared to RM454m in 3Q (2Q: RM481m, 1Q: RM403m), bringing YTD new property sales to ~RM2.1bn.
• Earnings visibility… Overall, Sunway’s outstanding construction order book stands at ~RM2.3bn, translating to ~1.8x FY11’s revenue, while its property unbilled sales of ~RM1.8bn (see Figure #2) translates to 2x FY11’s property revenue.
• TP of revised upwards by 2.5% to RM3.20 based on SOP valuation.

Source: HLIB Research 1 March 2012