Beats expectation
Profit above but sales in line
Sunway’s 4Q21 net profit of MYR159m (-35% YoY, +96% QoQ) was above our and consensus estimates while FY21 property sales of MYR2.6b were in line with our expectation but above management’s sales target. Sunway has set a lower sales target of MYR2.2b for 2022 (-15% YoY). We adjust our FY22/23 earnings forecasts by +8%/-11% to factor in FY22 sales assumption of MYR2.2b and the change in SCGB’s earnings forecasts. Post earnings adjustment, our TP is raised to MYR1.79 (+7sen; on an unchanged 0.8x
FY22 PBV). Maintain HOLD.
Results above expectations
Excl. one-off net gain of MYR2.3b arising from the partial divestment of Sunway Healthcare Group, Sunway’s 4Q21 core net profit was MYR159m (- 35% YoY, +96% QoQ), lifting 2021 core net earnings to MYR369m (-12% YoY), at 125%/124% of our/consensus estimates. The earnings gap was due to lower-than-expected finance costs and better-than-expected performance at its investment properties post-lockdown. Net gearing improved to 0.45x, from 0.56x in end-3Q21. Sunway has declared a 2nd
interim DPS of 1.5 sen (YTD: 2.5 sen) in 4Q21; above expectations.
Sets lower sales target for 2022
Sunway has locked-in MYR2.6b (+1x YoY) in property sales in 2021 or +18% above its revised sales target of MYR2.2b. The strong sales were mainly driven by its Singapore and Belfield projects. Management has set a lower sales target of MYR2.2b (-15% YoY) for 2022. Effective unbilled sales were MYR3.5b as at end-Dec 2021 (2.9x FY22F property revenue). Elsewhere, 55%-owned Sunway Construction Group (SCGB MK; HOLD; MYR1.58 TP) has secured MYR1.47b worth of jobs in 2021, increasing its outstanding orderbook to MYR10.1b as at end-Dec 2021.
Earnings adjustments
We adjust our FY22/23 net profit forecasts by +8%/-11% to factor in: 1) sales assumption of MYR2.2b for FY22, 2) the change in earnings forecasts from SCGB and 3) the change in progress billings assumptions. Sunway currently trades at 0.7x/1x PBV/PRNAV.