SUNWAY REAL ESTATE INVESTMENT TRUST SUNREIT (5176)
Business Summary Sunway Real Estate Investment Trust (SUNREIT) is an
all-rounder REIT listed on the Malaysia Stock Exchange. Listed in the
year 2011. it has grown into a portfolio of investment properties that
caters the retail, hospitality, office and even healthcare segment. Its
most attractive property is the Sunway Pyramid Shopping Mall, which is
its crown jewel.
Sunway Pyramid Shopping Mall
SUNREIT’s sponsor is Sunway Bhd, a property
development company also listed in the Kuala Lumpur Stock Exchange.
Hence, SUNREIT will always have a number of investment properties with
right of first refusal when Sunway Bhd decides to inject any properties
into SUNREIT’s current portfolio.
Even though SUNREIT has a portfolio of investment properties in
multiple sectors, retail investment properties contribute the most to
its gross rental income at approximately 74%. Hotel segments contribute
around 14%, and office buildings contribute around 7% as of the year
2019. Last update: 12.02.2020
Dividends (5/5):
Value (4/5):
Financials (4/5):
Growth (4/5):
Business (4/5): Reference: (i) MyKayaPlus Metrics Definition (ii) MyKayaPlus Metric Evaluation Scale Management
Although the Sunway Group Berhad is much well known for its founder
and chairman, Tan Sri Jeffrey Cheah, SUNREIT is actually formed by his
eldest daughter Ms Sarena Cheah. Sarena has always been with Sunway
Group upon graduation. She is also a Director in Sunway Berhad and is
touted to be the heiress of Sunway Berhad.
Quoted by her own father, Ms Sarena Cheah is a numbers and facts person.
And with Tan Sri Jeffrey Cheah confidently handling over the major
reins of Sunway Group and its related companies over to Ms.Sarena Cheah,
shareholders should feel confident as the founding father of Sunway
Group that the next management of Sunway is ready to bring the group to
greater heights.
The Cheah family are the biggest shareholders of SUNREIT via a
holding company Sunway REIT Holdings Sdn Bhd. at 40.88% as of the year
2019. The 2nd largest shareholder is the Employees Provident Fund Board
(EPF) at 15.85%. Financial Performance
SUNREIT has managed to grow its rental income year-on-year ever since
it’s listed. As of 2019, it has a gross rental revenue of RM 580
million, with a net profit of RM 386 million. Not only that, but we have
also seen SUNREIT growing by doing acquisition of new investment
properties.
Return on Equity (ROE) and Return on Assets (ROA) are at 8.6% and
4.7% respectively. During the early years after SUNREIT was listed, it
actually registers a higher fair value gain appreciation of its
investment properties in its portfolio, hence showing a higher net
profit over its gross revenue. That is also why the ROE and ROA values
are higher in the earlier years.
The recent ROE and ROA trends are a bit flattish as undistributed
income is trending higher. SUNREIT has a knack of not undergoing major
corporate actions even though it has been active in property
acquisitions. So the undistributed income will definitely come in handy
for future upcoming potential acquisitions. Balance Sheet
Year
Assets (RM’000)
Liabilities (RM’000)
Equities (RM’000)
Gearing Ratio
2019
8,158,038
3,361,482
4,796,556
37.89%
2018
7,523,858
3,170,622
4,353,236
38.58%
2017
6,839,893
2,628,173
4,211,720
34.27%
2016
6,537,259
2,486,029
4,051,230
33.28%
2017
6,430,018
2,447,758
3,982,260
33.31%
In the year 2019, SUNREIT has Assets of around RM 8.2 billion,
liabilities of RM 3.4 billion and equities of RM 4.8 billion. The
gearing ratio is at 38% and has always been stable within the 30+%
region.
Assets show a consistent year-on-year increase, which means SUNREIT’s
properties have appreciated well in fair value and there have been
aggressive portfolio acquisitions. Net Operating Cash Flow & Distribution Paid Out Source: SUNWAY REIT ANNUAL REPORT
Ever since its inception, SUNREIT has been performing well every
year. It managed to collect high rental income, increase its investment
property portfolios, and also increase its distribution paid out to
unitholders.
Plus, since Sunway Group Berhad is the sponsor of SUNREIT, any
upcoming properties can be injected to SUNREIT. This means that SUNREIT
will tag onto the potential growth of Sunway Group Berhad. Price MyKayaPlus Verdict
The share price will always reflect the performances of the company
or REIT. For SUNREIT, the price has been trending upwards ever since its
IPO. This is justified that after looking through its financial and
growth traction, it is no surprise that it has grown to the size it is
today.
As mentioned before, SUNREIT is poised to benefit from the ongoing
and upcoming projects of Sunway Group Berhad. There are several
catalysts that could further boost SUNREIT’s portfolio of investment
properties and also its future payout, most notably the Sunway Velocity
Shopping Mall at Cheras and also the new Sunway VelocityMedical Center
situated at Cheras.
Nonetheless, major reports are the retail segment facing a supply glut,
it would not be easy for SUNREIT to maintain its rental rate or even
increase it further if more and more new shopping malls are coming into
the saturated market.
Would you consider adding SUNREIT to your portfolio? Or would you rather look at IGB REIT? Check out our analysis on IGB REIT here.
DISCLAIMER The information available in this
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is neither a recommendation to purchase or sell any of the shares,
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