PETALING JAYA: UEM Sunrise Bhd
’s prospects in the second half of 2024 (2H24) will remain cushioned by healthy unbilled sales, totalling RM2.7bil, according to CGS International (CGSI) Research
The property developer appeared on track to achieve its new sales target of RM1bil for 2024 after registering RM502.4mil in new sales in 1H24, it said.
It noted that while the 2024 target was lower than the RM2.1bil achieved in 2023, this difference is largely due to the absence of the substantial RM874mil contribution from the fully sold Collingwood project in Melbourne, Australia.
“We think new sales in 2H24 would be supported by the gradual improvement in the takeup rates of existing projects and new launches,” CGSI Research said in its report yesterday.
“On a positive note, unbilled sales remain healthy at RM2.7bil (2.8 times cover ratio) as at end-June 2024, providing earnings visibility,” it added.
In addition to sales achievements, UEM Sunrise is expected to record revenue and gains from the disposal of two parcels of freehold land in East Ledang, Johor, by the end of 2024.
CGSI Research reiterated its “reduce” recommendation on UEM Sunrise, noting the current valuation was seen as already factoring in most positive developments, including the potential uplift from the possible revival of the Kuala Lumpur-Singapore high-speed rail project, which could boost economic activity in Johor, as well as the future monetisation of the group’s land bank.
It also maintained its target price at 75 sen, based on a 0.55 times 2024 price-to-book value, consistent with the 10-year mean.
UEM Sunrise’s net profit decreased by 32.5% from RM40.05mil in 1H23 to RM27.02mil in 1H24 in tandem with lower revenue.
During the period in review, the group’s revenue dropped by 28.9% from RM604.73mil in 1H23 to RM430.18mil in 1H24. The results were largely below consensus estimates.
CGSI Research said the decline in UEM Sunrise’s revenue was due to lower contributions from the property development segment amid lower progress billing from projects in advanced stages.
“It also recorded lower land sales of RM62.7mil in 1H24, down 28% y-o-y compared with RM86.5mil in 1H23. Moreover, the lower profit margins, as witnessed by the two-percentage-point decline in earnings before interest and tax margin, also weighed on 1H24 net profit,” it added.
