SUNWAY (5211) : MIDF Research upgrades Sunway to Buy
KUALA LUMPUR: MIDF Research has upgraded Sunway Bhd to Buy with a target price of RM3.72, adding that the stock currently trades at undemanding multiples of 10.7 times FY14 PER and 10.1 times FY15 PER.
In a note on Friday, the research house said it has made no changes to its FY14/15 estimates as the company’s earnings prospect is still on track to achieve earnings forecasts.
Furthermore, the potential special dividend payout post Sunway Construction Group (SCG) listing wouldfurther enhance returns on the stock.
"We upgrade our recommendation on Sunway Bhd to Buy with a revised target price of RM3.72 (from RM2.93). We apply a 40% discount to the property unit RNAV to account for the risks from various property cooling measures in Malaysia," it said.
MIDF said it is upbeat on the proposed relisting of its construction arm on the account of potential special cash dividend of 22 sen.
"We were made to understand that the listing could be delayed from May to June 2015. The bulk of proceeds from the listing would be returned to shareholders of Sunway Bhd and special cash dividend which we estimate would amount to between 19-22sen per share. The remaining proceeds would be utilised for working capital and listing expense," it said.
It noted that contribution of Sunway’s construction unit have not been fully appreciated due to Sunway Bhd being largely seen as a property play.
This is understandable as the property and REIT units explain 70% of its earnings.
Evidently, Sunway’s share price had hardly reacted to positive newsflows of its construction unit securing various mega infrastructure projects.
"With the proposed SCG listing, we expect the market to ascribe better value to Sunway’s construction assets as investors gain better insight to its capabilities, job secured and orderbook size," it noted.
http://www.thestar.com.my
KUALA LUMPUR: MIDF Research has upgraded Sunway Bhd to Buy with a target price of RM3.72, adding that the stock currently trades at undemanding multiples of 10.7 times FY14 PER and 10.1 times FY15 PER.
In a note on Friday, the research house said it has made no changes to its FY14/15 estimates as the company’s earnings prospect is still on track to achieve earnings forecasts.
Furthermore, the potential special dividend payout post Sunway Construction Group (SCG) listing wouldfurther enhance returns on the stock.
"We upgrade our recommendation on Sunway Bhd to Buy with a revised target price of RM3.72 (from RM2.93). We apply a 40% discount to the property unit RNAV to account for the risks from various property cooling measures in Malaysia," it said.
MIDF said it is upbeat on the proposed relisting of its construction arm on the account of potential special cash dividend of 22 sen.
"We were made to understand that the listing could be delayed from May to June 2015. The bulk of proceeds from the listing would be returned to shareholders of Sunway Bhd and special cash dividend which we estimate would amount to between 19-22sen per share. The remaining proceeds would be utilised for working capital and listing expense," it said.
It noted that contribution of Sunway’s construction unit have not been fully appreciated due to Sunway Bhd being largely seen as a property play.
This is understandable as the property and REIT units explain 70% of its earnings.
Evidently, Sunway’s share price had hardly reacted to positive newsflows of its construction unit securing various mega infrastructure projects.
"With the proposed SCG listing, we expect the market to ascribe better value to Sunway’s construction assets as investors gain better insight to its capabilities, job secured and orderbook size," it noted.
http://www.thestar.com.my
