SUNWAY (5211) - Sunway Bhd - Yet another blistering year
Target RM4.00 (Stock Rating: ADD)
Sunway's FY14 core net profit was 19% above our forecast and 22% above consensus. This was because we had underestimated the surge in property investment and associate incomes. Higher margins for the construction segment were largely in line, driven by strong job wins of RM1.1bn in FY14. We raise our FY15-16 EPS forecasts accordingly. Our target price rises as we update for balance sheet items; it is still pegged to a 20% RNAV discount. Sunway's key catalyst in the medium term is the listing of Sunway Construction, which should reward Sunway Berhad's shareholders with an estimated 20-30sen/share of special dividends (6-9% yield ex-normal dividends). Other likely catalysts are job wins. Maintain Add.
FY14 above expectations
FY14 core net profit was 19% above our full-year forecast and 22% above consensus. The main deviation came from higher-than-expected associate and investment incomes. Property development and construction registered steady growth yoy, while the marked improvement in construction pretax margins (+3%pts) was within our expectations. Sunway achieved RM1.7bn worth of total property sales in FY14 (FY13: RM1.8bn) with RM2.5bn unbilled sales as at end-14. Full-year DPS of 11 sen was above our forecast of 10 sen.
Steady growth from FY15
Sunway's operating performance should show steady growth in construction margins in FY15 (RM3bn outstanding order book, RM1.1bn total wins in FY14), while property development should continue to benefit from a higher-margin sales mix despite weaker billings (30% pretax margin in FY14). We still expect new orders worth RM1.5-2bn in both FY15 and FY16 (the group targets to achieve between RM1bn and RM2bn worth of new jobs this year), supported by the rollout of MRT 2 and other domestic building projects. The group won one of the sizeable above-ground works for MRT 1.
Go for the bumper dividends in 2H15
We believe the potential special DPS of 20-30 sen is intact, as the listing of Sunway Construction is still on the cards. We expect this to materialise in FY15 (listing likely by mid-15). Sunway offers a potential FY15 dividend yield of 6-9%, excluding normal dividends.
Source: CIMB Daybreak - 26 February 2015
Target RM4.00 (Stock Rating: ADD)
Sunway's FY14 core net profit was 19% above our forecast and 22% above consensus. This was because we had underestimated the surge in property investment and associate incomes. Higher margins for the construction segment were largely in line, driven by strong job wins of RM1.1bn in FY14. We raise our FY15-16 EPS forecasts accordingly. Our target price rises as we update for balance sheet items; it is still pegged to a 20% RNAV discount. Sunway's key catalyst in the medium term is the listing of Sunway Construction, which should reward Sunway Berhad's shareholders with an estimated 20-30sen/share of special dividends (6-9% yield ex-normal dividends). Other likely catalysts are job wins. Maintain Add.
FY14 above expectations
FY14 core net profit was 19% above our full-year forecast and 22% above consensus. The main deviation came from higher-than-expected associate and investment incomes. Property development and construction registered steady growth yoy, while the marked improvement in construction pretax margins (+3%pts) was within our expectations. Sunway achieved RM1.7bn worth of total property sales in FY14 (FY13: RM1.8bn) with RM2.5bn unbilled sales as at end-14. Full-year DPS of 11 sen was above our forecast of 10 sen.
Sunway's operating performance should show steady growth in construction margins in FY15 (RM3bn outstanding order book, RM1.1bn total wins in FY14), while property development should continue to benefit from a higher-margin sales mix despite weaker billings (30% pretax margin in FY14). We still expect new orders worth RM1.5-2bn in both FY15 and FY16 (the group targets to achieve between RM1bn and RM2bn worth of new jobs this year), supported by the rollout of MRT 2 and other domestic building projects. The group won one of the sizeable above-ground works for MRT 1.
Go for the bumper dividends in 2H15
We believe the potential special DPS of 20-30 sen is intact, as the listing of Sunway Construction is still on the cards. We expect this to materialise in FY15 (listing likely by mid-15). Sunway offers a potential FY15 dividend yield of 6-9%, excluding normal dividends.
Source: CIMB Daybreak - 26 February 2015
