Excel – http://1drv.ms/VVjUOJ
– Fair value:
– Absolute EY%:
– FY13 (EPS: 0.945) – Buy below 5.91, fair value 7.71 (MOS: 61.1%)
– R4Q (EPS: 0.881) – Buy below 5.51, fair value 7.19 (MOS: 58.3%)
– FY14 (EPS: 0.275) – Buy below 1.72, fair value 2.24 (MOS: -33.8%)
– FY15 (EPS: 0.3) – Buy below 1.87, fair value 2.44 (MOS: -22.8%)
– EPS applied to reach the current stock price (3.00): 0.368
– The spike up of EPS in FY13 was due to "Gain upon former subsidiary becoming an associate" (RM661,254K) and "Gain upon former subsidiary becoming a joint venture" (RM108,370K).
– If both gains are excluded, the normalised EPS is around 0.45.
– I remain cautious on the increasingly crowded Iskandar Malaysia development and luxury property market which would be hit by the new property cooling measures amid stricter lending rules. However, earnings are well-supported by its MYR2.4bn unbilled sales (MYR2.2bn in 3Q13) and MYR3.9bn construction orderbook.
– Moving forward, I still think that management’s sales target of RM1.8b on the back RM2.3b targeted launches is still highly realistic. Reason being that 82% of its upcoming launches are being priced below RM1.0m/unit which is more palatable for the market’s demand for ‘affordability’. If its upcoming Sunway Iskandar secures strong take-ups, I think stock price will have larger upside. Property unbilled sales of RM2.4b and remaining external orderbook of RM2.9b provides 1-1.5 years visibility.
– Moreover, Sunway’s integrated construction-property business model should give them an edge in terms of execution
– I am considering to sell off SUNWAY.
Latest Financial – Q2 2014 Financial Report (28 Aug 2014) http://www.bursamalaysia.com/market/listed-companies/company-announcements/1725445
At the time of writing, I owned shares of SUNWAY.