Sunway to launch RM2b projects in 2H17

By IZZAT RATNA

Property and construction firm Sunway Bhd will launch RM2 billion worth of residential projects with commercial and industrial components in the second-half of 2017 (2H17).

Sunway property division MD Sarena Cheah Yean Tih said the earliest project scheduled for launch is Sunway Subang, comprising 45 units of industrial offices located in Kampung Subang.

“Followed by serviced apartments in Kelana Jaya on 6.87ha of land, anchored by a 6.47ha lake located next to Damansara-Puchong Expressway,” she told reporters following Sunway’s AGM in Petaling Jaya yesterday.

“On the cards is a launch in the Iskandar region, Johor, comprising innovative serviced apartments that will appeal to the younger generation,” she said, adding that another 10 to 11 projects would also be launched in 2H17.

Cheah said the upcoming launches are expected to con- tribute RM1.2 billion in sales, a target that was set by the group earlier this year.

Sunway’s property development segment reported a 38.8% decline in revenue to RM143.3 million in the first-quarter ended March 31, 2017 (1Q17), from RM234.1 million in 1Q16.

The decline was attributed to lower sales and progress billings from local development projects and unbilled property sales that stood at RM1.4 billion.

“I think the lower 1Q17 numbers compared to 1Q16 are the result of vacant possessions, which means the delivery of completed products is being pushed back to a later date,” she said.

The head of the group’s property division said the real estate sector has been consolidating in the last two to three years, in tandem with financial institutions tightening their lending policy.

“One of the main drivers of the property market is the sentiment and confidence level, coupled with lower gross domestic product (GDP) growth, all these factors have significantly impacted market confidence,” she added.

Cheah said the financial institutions’ initiative to tighten lending policy could be interpreted as a good sign for the industry, as it allowed consolidation and digestion of surplus supplies in the market.

“We expect there will be pent-up demand in the future and with an accommodative interest rate, the market should pick up within the next six months, provided the economic growth is maintained and employment rate stabilises,” she added.

Cheah said the market is also seeing returning interest from foreign buyers, as the currency rate improves, which in turn is one of the drivers for the overall economic growth.

Sunway’s landbank currently stands at 1,335ha with a gross development value (GDV) of RM50.5 billion, while its Real Estate Investment Trust assets are valued at RM6.4 billion.

Sunway’s net profit rose 5.7% to RM107.91 million in 1Q17 from RM102.1 million in the same period a year ago, on higher contributions from all business segments except property development.

It recorded a 2.1% increase in revenue to RM1.09 billion in 1Q17 from RM1.07 billion in 1Q16.

The group’s construction segment recorded a higher revenue of RM316.8 million in 1Q17 from RM311.4 million a year ago.

Year to date, Sunway’s construction outstanding orderbook stands at RM4.6 billion. The group is expected to bid for more than RM2 billion in infrastructure contracts this year.

Its wholly owned subsidiary, Sunway Construction Group Bhd, is the largest listed pure play construction company in Malaysia with portfolios comprising mass rapid transit, light rail transit and bus rapid transit jobs previously.

In an exchange filing yesterday, the company proposed a bonus issue on the basis of four shares for every three existing Sunway shares held. It also announced free warrants on the basis of three warrants for every 10 existing shares.

It said the proposed bonus issue of shares would be effected by way of capitalising the share premium of the company and the entitlement date would be determined later.

Its share price closed at RM3.72 with a market capitalisation of RM7.74 billion.