‘Look … it’s just a tin mining wasteland.’ Or was it?
The year was 1980. Back then, most viewed the land to be redundant where its glory has passed due to the collapse of the local tin mining industry. Tan Sri Dato’ Seri Jeffrey Cheah, however, was envisioning a grand transformation of the 800-acre wasteland into a wonderland.
Today, the wonderland is known as Sunway City. It is an award-winning township consisting of the iconic Sunway Pyramid shopping mall, Sunway Lagoon theme park, hotels, office towers, condominiums, universities and a hospital known as Sunway Medical Centre.
The success of Sunway City has positioned Sunway Bhd as the top master community developer in Malaysia. As I write, Sunway Bhd is worth around RM 8.11 billion in market capitalization. In this article, I’ll share 8 key things you need to know about Sunway Bhd before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: SUNWAY / KLSE: 5211
Market Capitalization: RM 8.11 Billion (22 October 2017)
Share Price: RM 1.65 (22 October 2017)
Syariah Compliant: Yes
#2: The Business
Presently, Sunway Bhd has matured into a leading conglomerate with business segments such as:
- Property Development
In addition to Sunway City, Sunway Bhd is replicating its business model to develop Sunway City Ipoh, Sunway Damansara, Sunway Velocity and its largest integrated township project was undertaken thus far, Sunway Iskandar. In addition to major townships, Sunway Bhd is also involved in stand-alone development projects. To name a few, its notable projects include Sunway Palazzio, Sunway Vivaldi, Sunway SPK Damansara, Sunway Montana, and Sunway Eastwood.
Sunway Bhd owns 54.42% interest in Sunway Construction Group Bhd (SunCon), the construction arm of Sunway Bhd. SunCon offers a full range of services which include building, civil engineering, infrastructure works, foundation and geotechnical engineering, mechanical engineering, electrical and plumbing works internally to Sunway Bhd and to external customers mainly in Malaysia.
- Property Investment
Sunway Bhd owns 37.3% interest in Sunway REIT. As at 30 June 2017, it has a portfolio of 14 properties with the iconic Sunway Pyramid Shopping Mall as its trophy asset as it is the biggest income contributor to Sunway REIT.
- Strategic Investments
This segment includes Sunway Bhd’s quarry operations, trading and manufacturing of building materials and industrial products. As at 31 December 2016, Sunway Bhd has 8 quarries, 12 asphalt plants, and 7 manufacturing facilities on building materials.
#3: The Financials
From 2012 to 2016, Sunway Bhd has maintained its group revenues at RM 4 – 5 billion a year.
In 2013, Sunway Bhd had adopted the new FRS 10 accounting principle. It requires Sunway Bhd to consolidate the financials of Sunway REIT. Thus, Sunway Bhd had recorded a total of RM 769.7 million in fair value gain over its 80% stake in Sunway REIT Management Sdn Bhd and 34.5% stake in Sunway REIT. They had contributed to substantially high shareholders’ earnings of RM 1.49 billion in 2013.
From 2014 to 2016, Sunway Bhd has recorded decline in shareholders’ earnings. This is due to lower profits received from its investments in associate and joint venture companies during the period.
Source: Annual Reports of Sunway Bhd
#4: Growth Plans
Sunway Bhd has built a pipeline of property & construction projects in-hand to derive income in the immediate future. The main projects include:
- Property Development
In 2016, Sunway Bhd has made 3 strategic acquisitions. They include 4.84 acres of land in Kelana Jaya for RM 35.8 million, 4.25 acres of land for leasehold industrial land in Kampung Baru Subang for RM 20.2 million and 5.19 acres of land at Anchorvale Lane in Sengkang for S$ 241 million. With these acquisitions, Sunway Bhd’s remaining land bank stood at 3,292 acres with a Gross Development Value (GDV) of RM 48.5 billion as at 31 December 2016.
As at 30 June 2017, Sunway Bhd has accumulated RM 4.3 billion in the outstanding order book. This includes major contracts such as MRT Package V201 & S201 (Sungai Buloh – Persiaran Dagang), Sunway Medical Centre Phase 4, Sunway Velocity Medical Centre and the International School of Kuala Lumpur.
- Property Investment
Sunway Bhd is actively pursuing its asset expansion programme. This includes two major pipeline projects namely Sunway GEO Tower and Sunway GEO Avenue. Sunway GEO Tower is an 18-storey office tower with 185,000 sq. ft. of the net lettable area (NLA). Sunway GEO Avenue is a 4-storey commercial centre which is connected to the residences, business suites, and corporate offices in Sunway GEO at Sunway South Quay.
Sunway Bhd has identified several risks which is pertinent to the property & construction industry. This includes the risk of the subdued property market and project completion. Sunway Bhd mitigates these risks by focusing on new projects that are demand-driven, enhance promotional and incentive efforts, constant project monitoring and supervision to mitigate potential delays and claims.
Over the last 12 months (1 July 2016 – 30 June 2017), Sunway Bhd has made RM 634.299 million in earnings. As at 5 October 2017, Sunway Bhd has reported having 4,918.111 million ordinary shares. Thus, Sunway Bhd has made RM 0.129 in earnings per share (EPS). As I write, Sunway Bhd is trading at RM 1.65 a share. Thus, its current P/E Ratio is 12.79.
As at 30 June 2017, Sunway Bhd has reported having RM 7.74 billion in shareholders’ equity. Thus, its net assets a share is RM 1.57. At the current price of RM 1.65, Sunway Bhd’s current P/B Ratio works out to be 1.57.
#7: Investors’ Relation
For further enquiries on Sunway Bhd’s Investors Relation matters, you may contact:
Telephone: 03-5639 8674
#8: Major Shareholders
As at 20 March 2017, the substantial shareholders of Sunway Bhd are:
– Tan Sri Dato’ Seri Dr. Jeffrey Cheah Fook Ling, AO: 61.11%
– Employees Provident Board Bhd: 6.38%
– Amanah Saham Malaysia: 2.85%
– Amanah Saham Bumiputera: 2.55%
– AIA Bhd: 2.08%
What Do You Think Of Sunway Bhd As An Investment? Will You Invest In It? Share Your Views Below
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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Ian’s personal capacity. It does not in any way represent those of his employer and other related entities. Ian does not own any companies mentioned.