TA Securities Research has reiterated its buy call on Sunway Bhd with a higher target price of RM1.98 following the change in the group’s sales assumptions.
“We maintained our financial year 2019 (FY19) earnings estimates but revised FY20 and FY21 earnings higher by more than 5.3% and 3.8% respectively to reflect the change in property sales assumptions,” the research house said in a note on Jan 20.
Despite the challenging market environment, the research house said: “We understand that Sunway recorded total sales of RM1.55 bil in 2019, surpassing both our sales assumptions and the group’s internal sales target of RM1.3 bil.
“We believe the better-than-expected sales performance was largely driven by higher booking conversion from new launches in the Klang Valley such as Sunway Avila (Tower A) and Sunway GeoLake.
“In addition, we expect 4Q19 sales to be anchored by new launches in December 2019 such as Sunway Lenang Heights and Sunway Avila (Tower B), which were 20% and 40% booked respectively.”
The property developer has set a sales target of RM2 bil for 2020, underpinned by new launches worth RM3.5 bil.
“Supported by a healthy balance sheet, we believe the group will continue to ramp up land banking activities both in Malaysia and overseas this year,” it said.
Going into 2020, the research house believes Sunway will continue to ramp up land banking activities focusing on strategic lands suitable for transit-oriented development (TOD) both in Malaysia and overseas.
“The group’s solid financial position with net gearing of 0.38x and a cash balance of RM6 bil as at Sept 30, 2019 should bode well for its expansion plans,” it added. – Jan 20, 2020
