Sunway Holdings goes big into property development overseas

Sunway Holdings Bhd, better known for its construction and building materials manufacturing businesses, is going big into property development especially in the overseas market. The projects that were already launched by the group or currently in the pipeline will bring a potential gross development value (GDV) of RM2.6 billion over a three-year development period.

Sunway Holdings’ increasing foray into the property sector may potentially attract more interests from investors who are perhaps currently more familiar with Sunway City Bhd, its sister company. Sunway Holdings and Sunway City have Tan Sri Jeffrey Cheah’s family as common major shareholder.

Currently sitting on some RM450 million in unbilled property sales, Sunway Holdings is getting more active in Singapore’s real estate sector with the launch of its third joint-venture project in the island-state tomorrow, with a gross development value (GDV) of S$420 million (about RM1.03 billion).

The project — a private housing development called “Vacanza @ East” — is a 30:70 joint venture between Sunway Holdings and Singapore incorporated Hoi Hup Realty Pte Ltd. It sits on 4.75 acres of freehold land, and comprises eight blocks of 12-storey residential towers with close to 500 units for sale. The project enjoys easy access to the Pan Island Expressway.

“Vacanza @ East” has four unit types, with built-up areas ranging from 484 sq ft to 1,324 sq ft. Facilities in the housing development include a 50m lap pool, bio pond, clubhouse, timber deck, jogging path and fitness corner.

“We expect the response (for this project) to be positive,” said Sunway Holdings managing director Yau Kok Seng last Friday. He added that the launches of the Singapore project would be at “very good pricing” as the property market in Singapore has gone up.

An artist’s impression of Vacanza @ East in Singapore.

More projects in Singapore
Sunway Holdings’ current business model in Singapore is owning a 30% stake in all of its property ventures there and that the projects are generally for a development period of within three to four years from the date of launching, which makes them “fast-turnaround” projects. However, its property projects in Singapore normally reap a margin that is slightly lower than Malaysia.

“All our properties in Singapore are below the 15% mark in pre-tax margin (PBT) margin. As for Malaysia, it depends and is typically from 15% to 30% PBT margin,” Yau said.

The group will launch another major project next year. It has a 30% stake in a low-rise private condominium development in Miltonia Close, Yishun (Singapore), which is to be launched in the second half of next year. Occupying a 6.7-acre 99-year leasehold land, the project comprises 17 blocks of five-storey residential units with an estimated GDV of S$370 million.

Sunway Holdings through joint ventures had previously launched two projects in Singapore namely “City View at Boon Keng” and “The Peak @ Toa Payoh”. They were launched in 2008 and 2009 respectively with GDV of S$421 million and S$680 million. “City View at Boon Keng”, which was launched with an unprecedented price of S$530 per sq ft, has been fully sold while “The Peak @ Toa Payoh” at S$520 per sq ft has 95% of its 1,203 units sold.

The group’s property ventures back home have also been gaining momentum. It has sold 90% of its bungalows and semi-detached houses at its Sunway Rydgeway housing project in Melawati. Launched in October 2009, the project comprising 40 bungalow units and 30 semi-D units have a GDV of RM165 million.

In addition, the group has recorded 90% sales at its “PJ51A”  shop and office project that has GDV of RM97 million while its RM33 million Paragon Point 4-storey office project in Bangi has recorded 98% sales.

Last Friday, Sunway Holdings made its foray into Sri Lanka to undertake a mixed development project with a GDV of RM250 million. The group said its unit SunwayMas Sdn Bhd was teaming up with Sri Lanka-based Dasa Tourist Complex Pte Ltd to build 180 residential units and 70 commercial units in Colombo.

Yau said the Sri Lankan project will be launched in the second quarter of next year and be completed by mid-2014. The project would contribute very positively to the bottom line of the group, he said.

“We are anticipating more than 20% net margin for the project,” said Yau, adding that the project enjoyed a five-year “tax holiday” from the Sri Lankan government which would take effect after completion. SunwayMas will have a 65% stake in the joint venture and Dasa Tourist 35%.

For its second quarter ended June 30, 2010 (2Q10), Sunway Holdings posted a net profit of RM48.61 million on the back of a revenue of RM509.17 million. Its net asset per share stood at RM1.41 as at June 30.

Last Friday, its share price added one sen to close at RM1.79 with turnover of 458,000 shares.

The counter had traded to a 52-week high of RM1.82 on Sept 22, 2010 and a low of RM1.16 on Nov 30, 2009.

Data services indicated that Sunway Holdings was trading at a consensus estimated price-earnings per share of 8.10 times. The stock year-to-date has risen by 40.94%. Of the nine stockbroking firms tracking the stock, all had buy calls.


Written by Yong Min Wei
This article appeared in The Edge Financial Daily, September 27, 2010.