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Tuesday, August 18, 2009

Unbilled sales of RM1b to boost Sunrise results

PETALING JAYA: Sunrise Bhd’s results for its current financial year will be supported by its unbilled sales of about RM1bil but the tough outlook for the luxury property market in the Klang Valley will continue to be a threat.

According to OSK Research, Sunrise’s unbilled sales stood at RM1.01bil as at July with a potential addition of RM157.1mil pending the signing of sale and purchase agreements.

The research house said the company was expected to continue to register commendable earnings growth for most of its financial year ending June 30, 2010 (FY10) supported by its high unbilled sales. However, the outlook for the Klang Valley luxury condominium market would continue to be tough until some time next year.

It said developers’ claims of better property sales from recent launches should not be misconstrued as a sign of recovery as it was achieved via various discounts and innovative loan packages.

“This can cut into a developer’s earnings margin and such incentives cannot last indefinitely,” it said.

OSK Research viewed that Sunrise’s management sentiment was one of cautious optimism with the belief that the worst was indeed over for the sector.

“Being cautious, however, the management remains uncommitted to any timing and pricing of its future launches,” the research house said.

Meanwhile, AmResearch acknowledged that Sunrise would continue to recognise profits from its strong unbilled sales for FY10 onwards.

Its unsold inventories had dropped to about RM200mil as at June versus RM300 to RM400mil in the preceding quarter.

“We feel Sunrise will step up its plans for new launches especially for MK28 and Solaris Towers KL, which have been granted all the necessary approvals,” the research house said.

For its overseas projects, AmResearch said the management was still cautious in launching overseas projects.

Its project in Canada, which has a gross development value of RM1.2bil, would be launched in two phases three years apart.

Sunrise posted a net profit of RM43.1mil for the fourth quarter ended June 30 against RM44.9mil a year ago. Its revenue stood at RM237.3mil.

For FY09, it reported a net profit of RM156.2mil on a 17% growth in revenue to RM803.9mil.

OSK Research said the growth for FY09 was driven by higher earnings contribution from its property projects that included MK10, Dutamas, Maiden, MK11 and the Residence.

“Since the introduction of the 10/90 financing scheme and two-year deferred payment for buyers, new property sales indeed picked up in the fourth quarter, particularly for the MK11 and the Residence,” the research house said.

HwangDBS Vickers Research said Sunrise’s net profit for the fourth quarter was within its expectations.

“Its net gearing rose to 46% from 38% in the third quarter due to funding for on-going projects but it is expected to improve with unbilled sales,” it said.

HwangDBS raised the company’s earning estimates by 37% to RM148mil after taking into account stronger take-up rates for upcoming launches.

“Consequently, we raised the target price to RM2.60 from RM2.10 based on 30% discount to revised net asset value of RM3.77 and maintain our ‘buy’ call,” it said.

AmResearch revised Sunrise’s earnings estimates to RM174mil and RM177mil for FY10 and FY11 respectively, in view of the expected launches for its MK28 and Solaris Towers.

It forecast the company’s FY12’s earnings at RM178.3mil.

The research house also expected Sunrise’s gearing to improve to 34% in FY10 and 22% in FY11.

By The Star (by Lee Kian Seong)

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