PP 7767/09/2010(025354)

12 April 2010

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

New s Upda te
12 April 2010
MARKET DATELINE

Sunway Holdings Share Price

Fair Value
:
:
RM1.56
RM1.69
To Embark On A Property Project In Puncak Jalil Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (SUNWAY; Code: 4308) Bloomberg: SGW MK

Net FD Net
FYE Turnover Profit EPS# Growth PER EPS# C.EPS P/CF P/NTA ROE Gearing GDY
Dec (RMm) (RMm (sen) (%) (x) (sen) (sen) (x) (x) (%) (%) (%)
2009** 2,589.9 109.3 13.6^ (27.0)^ 11.5 - - 9.7 1.5 9.5^ 0.6 1.4
2010f 2,406.9 128.6 21.4 57.5 7.3 16.9 19.0 14.0 1.2 14.3 0.5 1.8
2011f 2,230.9 136.2 22.7 5.9 6.9 17.8 21.0 18.5 1.0 13.2 0.5 1.8
2012f 2,643.2 156.3 26.0 14.8 6.0 20.2 21.0 13.8 0.9 13.1 0.4 1.8
Main Market Listing /Non-Trustee Stock / Syariah-Approved Stock By The SC #Excluding EI * Consensus Based On IBES
E i
**18M ^Annualised

♦ A property project in Puncak Jalil. Geneba Dua, a 65:35 JV between

Issued Capital (m shares) 600.9
Sunway and a private company called Monty Properties, plans to venture into
Market Cap(RMm) 937.4
a high-end residential property project comprising terrace and semi- Daily Trading Vol (m shs) 1.1
detached houses with a total GDV of RM120m on land parcels measuring a 52wk Price Range (RM) 0.765-1.56
total of 16.9 acres in Puncak Jalil, Selangor. We understand from sources Major Shareholders: (%)
that Monty Properties is the “beneficial owner” of the land, and the land will Tan Sri Jeffrey Cheah 43.1
be sold to the JV company in a later stage. For a start, Sunway and Monty
Properties will each pump in equity amounting to RM3.9m and RM2.1m
respectively to the JV company.
FYE Dec FY10 FY11 FY12
♦ Positive. We are positive on Sunway’s latest proposed property venture, EPS Revision (%) - - -
given the good location in the mature and highly sought-after area south of Var to Cons (%) +13 +8 +24

Kuala Lumpur. Assuming a PBT margin of 30%, we estimate that the latest PE Band Chart
property project will earn Sunway RM23m PBT over the project’s life. The
PER = 10x
latest deal will effectively boost Sunway’s outstanding landbank in Malaysia PER = 8x
PER = 6x
by 4% to 396 acres, underpinning its property profits in Malaysia over the PER = 4x
long term. Including Singapore (at associate level), we project Sunway’s
property profits make up 23-30% of group profits in FY12/10-11.
♦ Forecasts. Maintained as we already assume Sunway to register property
turnover and EBIT in Malaysia of about RM50m and RM15m per annum in
FY12/10-11, underpinned by recurring sales at its existing property projects
as well as contributions from new property ventures such as the latest one. Relative Performance To FBM KLCI

♦ Risks. The risks include: (1) New construction contracts secured in FY12/10
coming in below our target of RM1.5bn; and (2) Rising input costs.
♦ Risk appetite for construction stocks to improve. We are beginning to
Sunway Holdings

turn a little more upbeat on the sector, prompted largely by investors’

improving risk appetite for construction stocks following: (1) The massive FBM KLCI

underperformance of the sector vis-à-vis the market in 4Q2009 and 1Q2010;

and (2) A better sector news flow and new expectations leading up to the
announcement of the 10th Malaysia Plan (10MP) in June 2010. These may
moderate negative elements such as: (1) The slow pace of the roll-out of
public projects, shrinking margins and declining dominance of established
players in large-scale projects locally; and (2) The not-so-rosy outlook and
increased operating risks in key overseas markets (following the Dubai credit
crisis, Dong’s devaluation and rising arbitration cases). Joshua CY Ng
(603) 92802151
♦ Maintain Outperform. Indicative fair value is RM1.69 based on 10x fully- joshuang@rhb.com.my
diluted FY12/10 EPS of 16.9sen, in line with our benchmark 1-year forward
target PER for the construction sector of 10-14x.

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Table 2: Outstanding Construction Orderbook

Project Outstanding Works
(RMm)
Overseas
Rihan Heights, Arzanah Development in Abu Dhabi, UAE (excluding M&E) 555^
Rihan Heights, Arzanah Development in Abu Dhabi, UAE (M&E) 236*
Pre-cast concrete components in Singapore 398
Road projects in India 138
Al Reem Island, Abu Dhabi 103
Total 1,430

Local
Government office towers in Precinct 4, Putrajaya 333
Hotel and office tower in Precinct 1, Putrajaya 147
Impiana KLCC (Phase 2) 88
South Klang Valley Expressway 65
Piling & substructure works in Johor Bahru 23
Others 113
Total 769

Grand Total 2,199

^60% share of RM925m *75.1% share of RM314m
Source: Company

Table 3: Earnings Forecasts Table 4: Forecast Assumptions

FYE Dec (RMm) FY09a* FY10F FY11F FY12F FYE Dec FY10F FY11F FY11F

Turnover 2,589.9 2,406.9 2,230.9 2,643.2 Construction EBIT margin (%) 7.1 6.9 6.5
Turnover growth (%) -5.3 39.4 -7.3 18.5 New orderbook secured (RMm) 1,500 1,500 1,500

EBITDA 178.8 238.8 226.0 250.0

EBITDA margin (%) 6.9 9.9 10.1 9.5

Depreciation -43.0 -45.1 -47.4 -49.8

Net Interest -54.0 -34.9 -34.1 -33.1
Associates 72.2 38.3 53.9 53.9
EI 0.0 0.0 0.0 0.0

Pretax Profit 153.9 197.0 198.5 221.0

Tax -33.9 -42.0 -45.3 -52.4
PAT 120.1 155.0 153.2 168.7
Minorities -10.8 -26.4 -17.0 -12.3
Net Profit 109.3 128.6 136.2 156.3
*18M ^Annualised
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

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This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based
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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on
higher risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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