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| AmResearch: Sunrise remains a buy with higher target price |
| Written by Financial Daily | |||
| Tuesday, 18 August 2009 11:22 | |||
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In a note, AmResearch said it had factored in an increase of between 2% and 13% in Sunrise’s net profit to arrive at estimates of RM174 million and RM177 million for financial years (FY) ending June 2010 and 2011 respectively. Sunrise shares’ new fair value of RM2.73 represents a 16.2% or 38 sen increase from AmResearch’s previous forecast RM2.35. The revision is based on a 15% discount to the research house’s new estimate for the developer’s net assest value (NAV) a share of RM3.21. “Our higher NAV estimate is underpinned by expected new launches on the back of renewed interest in the property market. At the analysts briefing, Sunrise painted a more optimistic outlook compared to the last briefing in May 2009. “Management stresses the importance of product differentation and reinvention to stay ahead of competitors while ensuring efficient costing,” wrote AmResearch whose note was issued following the release of Sunrise’s FY09 results last Friday. The research house which maintained its buy call for Sunrise shares at RM2.09, said the developer’s financials will be helped by its  unbilled real estate sales, besides the fact that the company’s unsold inventories have declined to some RM200 million from between RM300 million and RM400 million in the preceding quarter. Filings to the bourse indicated that Sunrise had unbilled sales of RM892 million as July 31, 2009 which is expected to support earnings till FY11. At the same time, AmResearch foresees the developer’s net gearing improving to 34% and 22% in FY10 and FY11 respectively, from 46% as at June 2009 as the company received proceeds from the sale of its properties. Sunrise’s FY09 pre-tax profit rose 2.3% to RM205.76 million from RM201.12 million a year earlier, helped by contribution from the firm’s ongoing residential and commercial property projects. Revenue climbed 17.2% to RM803.92 million from RM685.83 million but net profit fell 2.4% to RM156.2 million from RM160.05 million. Sunrise’s net assets per share stood at RM1.97 as at June this year. On quarterly terms, fourth quarter pre-tax profit rose 26%. Sunrise plans to reward its shareholders with a first and final dividend of 3% less 25% tax for FY09. During FY08, the company had distributed treasury shares at a ratio of one treasury unit for every share held in Sunrise. Sunrise’s full-year net profit of RM156.2 million accounted for 96% of AmResearch’s forecast of RM163 million but surpassed consensus estimates by 8%, according to the research house. Sunrise lost two sen to close at RM2.07 yesterday. This article appeared in The Edge Financial Daily, August 18, 2009.
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