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ed: JS / sa:BC, PY, CS
HOLD Last Traded Price ( 21 Mar 2018): RM0.99 (KLCI : 1,865.80)
Price Target 12-mth: RM1.05 (7% upside) (Prev RM1.10)
Analyst QUAH He Wei, CFA +603 2604 3966 [email protected]
What’s New Expect weak 1H18 results due to the absence of
overseas contribution pursuant to adoption of MFRS15
Cut FY18-19F earnings by 20%/3%
No imminent turnaround in Iskandar Malaysia property
market
Maintain Hold with lower TP of RM1.05
Price Relative
Forecasts and Valuation FY Dec (RMm) 2017A 2018F 2019F 2020F
Revenue 2,903 2,706 3,023 1,104 EBITDA 350 292 373 221 Pre-tax Profit 439 386 284 144 Net Profit 280 268 197 98.5 Net Pft (Pre Ex.) 106 121 197 98.5 Net Pft Gth (Pre-ex) (%) (28.9) 14.7 62.8 (50.0) EPS (sen) 6.17 5.91 4.34 2.17 EPS Pre Ex. (sen) 2.33 2.67 4.34 2.17 EPS Gth Pre Ex (%) (29) 15 63 (50) Diluted EPS (sen) 2.33 2.67 4.34 2.17 Net DPS (sen) 1.54 1.48 1.08 0.54 BV Per Share (sen) 156 160 163 164 PE (X) 16.0 16.7 22.7 45.4 PE Pre Ex. (X) 42.4 37.0 22.7 45.4 P/Cash Flow (X) nm 5.8 6.7 2.6 EV/EBITDA (X) 23.2 25.9 19.1 25.1 Net Div Yield (%) 1.6 1.5 1.1 0.6 P/Book Value (X) 0.6 0.6 0.6 0.6 Net Debt/Equity (X) 0.4 0.4 0.3 0.1 ROAE (%) 4.0 3.7 2.7 1.3 Earnings Rev (%): (20) (3) N/A Consensus EPS (sen): 5.60 6.10 4.80 Other Broker Recs: B: 3 S: 2 H: 11
Source of all data on this page: Company, AllianceDBS, Bloomberg Finance L.P
Headwinds ahead
Weak sentiment in Iskandar Malaysia. UEM Sunrise (UEMS)
continues to be severely affected by the weak sentiment
towards Iskandar Malaysia’s properties with its Johor sales
plunging from RM1.9bn in FY13 to
RM290m/RM690m/RM408m in FY15-FY17. Also, the market
has started to grapple with increasing property supply,
especially high-end condos, which have been exacerbated by
the aggressive entry of Chinese developers with their condo
projects being completed progressively. Maintain HOLD as we
do not foresee any recovery in Iskandar Malaysia property
market in the near term.
Where we differ? Our earnings forecast is much lower than
consensus, probably due to our more conservative stance on the
property market in Iskandar Malaysia. Strong sales
replenishment is critical to sustain UEMS’ earnings momentum.
Potential catalyst? As 75% of UEMS’ land bank is located in
Iskandar Malaysia due to its role as the master developer, a
recovery in the sentiment towards the property market in the
area will be the much-needed catalyst for the company. We
believe the commencement of works for Malaysia-Singapore
High Speed Rail and Rapid Transit System will be the next re-
rating catalyst. Valuation:
We maintain our HOLD call for UEMS with a lower TP of
RM1.05, based on unchanged 70% discount to our RNAV.
UEMS may not be able to monetise the deep value of its Johor
land bank anytime soon given the weak sentiment towards
Iskandar Malaysia properties.
Key Risks to Our View:
Potential oversupply of high-end condos in Iskandar Malaysia.
Property prices there are also comparable to more matured
areas (KL and Penang), which may not be sustainable. At A Glance
Issued Capital (m shrs) 4,537
Mkt. Cap (RMm/US$m) 4,469 / 1,141
Major Shareholders (%)
UEM Group 66.1
Lembaga Tabung Haji 6.9
Free Float (%) 23.6
3m Avg. Daily Val (US$m) 0.88
ICB Industry : Financials / Real Estate
DBS Group Research . Equity
22 Mar 2018
Malaysia Company Guide
UEM Sunrise Version 7 | Bloomberg: UEMS MK | Reuters: UEMS.MK Refer to important disclosures at the end of this report
36
56
76
96
116
136
156
176
196
216
0.7
0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
2.5
2.7
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Relative IndexRM
UEM Sunrise (LHS) Relative KLCI (RHS)
Page 2
Company Guide
UEM Sunrise
WHAT’S NEW
No imminent turnaround
Is the worst over? We believe UEMS’ 1H18 results will remain
weak in view of the absence of profit contribution from its
Australian projects. Effective Jan 2018, UEMS has adopted
the Malaysian Financial Reporting Standards (MFRS) 15 which
will only allow revenue recognition for its international
projects upon completion of the projects. This is in contrast to
UEMS’ prior practice of progressive recognition for both its
local and overseas development projects.
Therefore, both its on-going Australian projects, namely
Aurora Melbourne Central, Melbourne (RM2.4bn GDV) and
Conservatory, Melbourne (RM991m GDV) which have
attained construction progress of ~60% as at Jan 2018 will
only contribute from 2H18 onwards as per its completion
schedule. Note that overseas projects contributed RM1.34bn
revenue in FY17, which is 46% of FY17 revenue of RM2.9bn.
This is expected to result in a much weaker 1H18 financial
performance given the smaller revenue recognition merely
from Malaysian projects which may not commensurate with
the operating expenses to be incurred.
This led us to revise down our FY18-19F earnings by 20%/3%
respectively as we incorporate the impact of MFRS 15 in our
forecast.
Dependent on overseas market: UEMS’ unbilled sales stood at
RM4.8bn as at Dec 2017, of which only 29% or RM1.37bn
came from its Malaysian projects. While the remaining 71%
or RM3.4bn unbilled sales from Australia will provide lumpy
profit recognition upon completion of the respective projects,
sales replenishment from its local market remains a key
concern as >99% of its land bank is located in Malaysia.
Breakdown of unbilled sales
Source: Company, AllianceDBS
RM1.2bn sales target in FY18. UEMS has set its FY18 sales
target at RM1.2bn (FY17: RM1.5bn) while launch pipeline
stands at RM1bn. It is also actively working on selling its
completed inventory which stood at RM610m as at Dec
2017. Nevertheless, we believe that the uncertainty arising
from the upcoming general election which has to be held by
Aug 2018 will continue to be a drag for property sales as
potential buyers will likely defer their purchase decision until
election is over.
Johor market remains lacklustre. We believe the overall
market conditions in Iskandar Malaysia remains subdued as
the concern of oversupply in high-rise projects continues to
dampen market sentiment. Supply-demand dynamics remains
the worst in Johor relative to other states in Malaysia due to
the large incoming supply, no thanks to the frenzied launches
in Iskandar Malaysia prior to 2014. We are of the view that it
may take several years for the market to absorb the excess
supply in Johor, hence UEMS may find it challenging to
develop its massive landbank despite being the master
developer of Iskandar Puteri. Also, it is set to launch only
RM275m worth of new projects in Johor in 2018, out of its
launch pipeline of RM1bn.
UEMS’ property sales in Johor
Source: Company, AllianceDBS
UEMS’ overall property sales
Source: Company, AllianceDBS
Johor12%
Klang Valley17%
Australia71%
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
201
0
201
0
201
1
201
2
201
3
201
4
201
5
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6
201
7
RMm
0
500
1,000
1,500
2,000
2,500
3,000
3,500
201
0
201
0
201
1
201
2
201
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7
RMm
Page 3
Company Guide
UEM Sunrise
Huge incoming supply in Johor (units)
*Includes data from serviced apartments which is classified under commercial properties
Source: Company, AllianceDBS
Maintain Hold. We reiterate our HOLD recommendation with
a lower TP of RM1.05 after incorporating our earnings
revision. This is based on 70% discount to our RNAV as a
stiffer competition amid a challenging property market in
Malaysia may affect its property sales replenishment.
2016 KL Selangor Johor Penang Melaka Others Malaysia
Existing Stock 460,296 1,419,474 744,256 408,732 173,445 1,831,734 5,037,937
% of Msia 9% 28% 15% 8% 3% 36% 100%
Incoming supply 80,941 203,248 200,330 95,843 32,123 367,963 980,448
% of stock 18% 14% 27% 23% 19% 20% 19%
Planned supply 92,914 107,513 188,818 50,968 14,780 253,512 708,505
% of stock 20% 8% 25% 12% 9% 14% 14%
Page 4
Company Guide
UEM Sunrise
RNAV
Stake Land Value Value Eff Value
Acres RMpsf RMm RMm
Puteri Harbour 100% 68 350 1,043 1,043
CS-3, Puteri Harbour 50% 7 350 102 51
SILC 100% 207 80 721 721
East Ledang 100% 129 65 365 365
Horizon Hills 50% 566 80 1,971 986
Afiat Healthpark 100% 43 50 94 94
Nusa Idaman 100% 27 60 69 69
Nusa Bayu 100% 66 50 145 145
Residential North 40% 100 110 479 192
Bio Xcell 40% 61 80 213 85
Lifestyle Retail Mall & Residences 55% 30 150 196 108
Residential South 80% 208 90 814 651
Gerbang Nusajaya - Motorsports City 30% 300 45 588 176
Gerbang Nusajaya - Eco-Industrial Park 40% 519 45 1,017 407
Gerbang Nusajaya 40% 500 45 980 392
Gerbang Nusajaya 100% 3,232 40 5,631 5,631
Nusajaya remaining landbank 100% 531 65 1,503 1,503
6,593 55 15,932 12,619
Reserves area 1,081 - -
Total Nusajaya 7,674 55 15,932 12,619
Desaru 51% 679 18 532 271
Frasers Metropolis 60% 2,500 8 871 523
Symphony Hills @ Cyberjaya 100% 24 50 52 52
Bangi Land, Selangor 100% 449 16 313 313
Seremban Forest Heights 50% 241 10 105 52
Sinaran Hills, Kajang 100% 65 30 85 85
Angkasa Raya, KLCC 100% 2 3,300 230 230
Floresta Solaris 3 62% 19 300 244 152
Jelutong Commercial Center 50% 19 150 127 63
Undeveloped landbank 2,884 715 715
Klang Valley 100% 44 45 87 87
Mersing 100% 431 5 94 94
Tapah 100% 2,405 5 524 524
Canada 100% 4 60 10 10
Total Outside Nusajaya 4,381 2,403 1,934
Grand Total 12,055 18,335 14,553
NTA ex-land & JV/associates 1,198
NPV of unbilled sales (10% WACC) 238
UEML RNAV 15,989
No of shares 4,537
RNAV/share 3.52
Page 5
Company Guide
UEM Sunrise
CRITICAL DATA POINTS TO WATCH
Critical Factors
Weak sales momentum in Iskandar Puteri. UEMS is predominantly
the master developer of Iskandar Puteri, one of the flagship zones
within Iskandar Malaysia. Its properties in Iskandar Puteri were
selling like hot cakes a few years ago but the trend has reversed
since three years ago when Iskandar Puteri property sales in FY15-
17 dipped to RM290m/RM690m/RM408m from RM1.9bn in FY13.
The weak sentiment in the property market in Iskandar Malaysia,
brought about by a deluge of competing property launches by
other developers, coupled with the tightening measures
implemented by the government, has resulted in much slower sales
for UEMS’ property projects in Iskandar Puteri.
RM1.2bn sales target in FY18. UEMS achieved FY17 sales of
RM1.49bn, exceeding its sales target of RM1.2bn, thanks to the
overwhelming response from its sales in Solaris Parq due to the
strategic location. Nevertheless, at Iskandar Puteri, we remain
cautious given the weak market sentiment and oversupply
situation.
Good product offerings are critical to kick off sales. Given the
challenging outlook for Iskandar Malaysia’s property market, UEMS
may have to review its product offerings and be strategic and
discerning in the timing of future launches to beat the competition.
We believe that luxury high-rise buildings in Iskandar Malaysia will
face a much tougher time in view of the current supply glut and
high prices, which are unsustainable.
RM4.8bn unrecognised revenue. This will offer near-term earnings
visibility, from progress billing for several projects that have been
sold. Nevertheless, UEMS will need to achieve its sales target in
order to sustain its growth momentum going forward.
Potential land sales to boost earnings. Given UEMS’ large land bank
in Iskandar Puteri, there could be strategic land sales to third
parties, which would help to expedite the overall development and
de-risk its exposure progressively. We have not included any
potential strategic land sales in our earnings forecast, although we
understand management is talking to some parties, which may
present upside surprises to our numbers.
Property sales
property revenue
EBIT margin
pretax margin
Source: Company, AllianceDBS
1369
1492
843
1057966
0.0
215.2
430.5
645.7
860.9
1076.2
1291.4
1506.6
2016A 2017A 2018F 2019F 2020F
1602
2249 2214
2863
944
0.0
584.1
1168.1
1752.2
2336.3
2920.4
2016A 2017A 2018F 2019F 2020F
10.3 10.3
8.58
10.1
13.2
0.00
2.70
5.41
8.11
10.81
13.51
2016A 2017A 2018F 2019F 2020F
11.8
15.114.3
9.4
13
0.0
3.1
6.1
9.2
12.2
15.3
2016A 2017A 2018F 2019F 2020F
Page 6
Company Guide
UEM Sunrise
Appendix 1: A look at Company's listed history – what drives its share price?
Share price vs FBM KLCI
Source: Bloomberg L.P., AllianceDBS
Remarks
A – Iskandar Malaysia was the property hotspot in Malaysia as the government poured in massive investments and introduced various incentives to make it the destination of choice for locals and investors. UEMS benefited as it is the master developer of Iskandar Puteri – one of the flagship zones of Iskandar Malaysia B – Concern on property oversupply in Iskandar Malaysia affected the sentiment, and the entry of aggressive developers from China exacerbated the situation C – Share price remains undervalued given the absence of potential recovery in Johor property market
Share price vs property sales
Source: Bloomberg L.P., AllianceDBS
Remarks
There is little correlation between share price performance and property sales. UEMS’ property sales have been coming under pressure due to the challenging property market in Johor though it has started to diversify into the Australian property market.
1200
1300
1400
1500
1600
1700
1800
1900
2000
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Mar-
11
Jul-1
1
No
v-1
1
Mar-
12
Jul-1
2
No
v-1
2
Mar-
13
Jul-1
3
No
v-1
3
Mar-
14
Jul-1
4
No
v-1
4
Mar-
15
Jul-1
5
No
v-1
5
Mar-
16
Jul-1
6
No
v-1
6
Mar-
17
IndexRM
UEMS (LHS) FBM KLCI (RHS)
A
B
C
0
200
400
600
800
1000
1200
1400
1600
1800
2000
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Mar-
11
Au
g-1
1
Jan
-12
Jun-1
2
No
v-1
2
Ap
r-1
3
Sep
-13
Feb
-14
Jul-1
4
Dec-
14
May-
15
Oct
-15
Mar-
16
Au
g-1
6
Jan
-17
Jun-1
7
No
v-1
7
RMmRM
UEMS (LHS) Property sales (RHS)
Page 7
Company Guide
UEM Sunrise
Balance Sheet:
Healthy gearing enables the group to land bank strategically.
UEMS’ balance sheet remains healthy with 44% net gearing as
at end-Dec 2017. The group has embarked on cash
consolidation exercise to divest its non-core assets and land to
strengthen its balance sheet.
Share Price Drivers:
Improved property sales at Iskandar Puteri could re-rate stock.
Given the challenging outlook for Iskandar Malaysia properties
because of excess supply, UEMS would have to come up with
innovative and differentiated products to boost demand, which
remains weak. Strong property sales in Iskandar Malaysia will be
a key catalyst for UEMS as this will underline buyers’ confidence
in its products. This will also bode well for its growth prospects
as the bulk of its land bank is located within Iskandar Puteri.
Key Risks:
Oversupply of high-end condos. There could be a potential
oversupply of high-end condos in Iskandar Malaysia with a
slew of launches over the past three years. Property prices are
now comparable to more matured areas (KL and Penang),
which may not be sustainable.
Iskandar Malaysia lacks critical mass. While the infrastructure is
in place, more economic drivers and crowd-pulling aspects are
required to improve vibrancy.
Company Background
UEMS is the largest landowner in Iskandar Malaysia and Mont
Kiara. It also has land bank in other parts of Greater KL (Bangi
and Cyberjaya) and Melbourne.
Leverage & Asset Turnover (x)
Capital Expenditure
ROE (%)
Forward PE Band (x)
PB Band (x)
Source: Company, AllianceDBS
0.0
0.1
0.1
0.2
0.2
0.3
0.3
0.00
0.10
0.20
0.30
0.40
0.50
0.60
2016A 2017A 2018F 2019F 2020F
Gross Debt to Equity (LHS) Asset Turnover (RHS)
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2016A 2017A 2018F 2019F 2020F
Capital Expenditure (-)
RMm
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
2016A 2017A 2018F 2019F 2020F
Avg: 38.4x
+1sd: 46.1x
+2sd: 53.7x
-1sd: 30.8x
-2sd: 23.2x
18.1
23.1
28.1
33.1
38.1
43.1
48.1
53.1
58.1
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
(x)
Avg: 0.89x
+1sd: 1.19x
+2sd: 1.48x
-1sd: 0.59x
-2sd: 0.3x0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
(x)
Page 8
Company Guide
UEM Sunrise
Key Assumptions
FY Dec 2016A 2017A 2018F 2019F 2020F
Property sales 1,369 1,492 843 1,057 966
property revenue 1,602 2,249 2,214 2,863 944
EBIT margin 10.3 10.3 8.58 10.1 13.3
pretax margin 11.8 15.1 14.3 9.40 13.0
Income Statement (RMm)
FY Dec 2016A 2017A 2018F 2019F 2020F
Revenue 1,841 2,903 2,706 3,023 1,104
Cost of Goods Sold (1,629) (2,580) (2,443) (2,683) (919)
Gross Profit 213 323 262 340 185
Other Opng (Exp)/Inc (24.0) (25.3) (30.2) (34.8) (39.0)
Operating Profit 189 298 232 305 146
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 75.8 27.0 29.7 32.7 36.0
Net Interest (Exp)/Inc (46.9) (60.7) (72.3) (53.7) (38.7)
Exceptional Gain/(Loss) 0.0 175 196 0.0 0.0
Pre-tax Profit 218 439 386 284 144
Tax (69.3) (157) (116) (85.2) (43.1)
Minority Interest 0.0 (1.5) (2.0) (2.0) (2.0)
Preference Dividend 0.0 0.0 0.0 0.0 0.0
Net Profit 148 280 268 197 98.5
Net Profit before Except. 148 106 121 197 98.5
EBITDA 289 350 292 373 221
Growth
Revenue Gth (%) 5.2 57.7 (6.8) 11.7 (63.5)
EBITDA Gth (%) (18.0) 21.3 (16.6) 27.5 (40.6)
Opg Profit Gth (%) (29.4) 57.7 (22.0) 31.4 (52.1)
Net Profit Gth (Pre-ex) (%) (32.3) (28.9) 14.7 62.8 (50.0)
Margins & Ratio
Gross Margins (%) 11.6 11.1 9.7 11.2 16.8
Opg Profit Margin (%) 10.3 10.3 8.6 10.1 13.2
Net Profit Margin (%) 8.1 9.6 9.9 6.5 8.9
ROAE (%) 2.2 4.0 3.7 2.7 1.3
ROA (%) 1.1 1.9 1.9 1.4 0.7
ROCE (%) 1.1 1.5 1.2 1.7 0.8
Div Payout Ratio (%) 0.0 25.0 25.0 25.0 25.0
Net Interest Cover (x) 4.0 4.9 3.2 5.7 3.8
Source: Company, AllianceDBS
Expect low earnings due to weak property sales replenishment
Lower than management’s target
Page 9
Company Guide
UEM Sunrise
Quarterly / Interim Income Statement (RMm)
FY Dec 4Q2016 1Q2017 2Q2017 3Q2017 4Q2017
Revenue 625 542 898 716 748
Cost of Goods Sold (569) (454) (834) (612) (692)
Gross Profit 55.2 88.1 63.4 104 55.8
Other Oper. (Exp)/Inc (4.6) 0.0 0.0 (6.2) (7.5)
Operating Profit 50.6 88.1 63.4 98.0 48.3
Other Non Opg (Exp)/Inc 0.0 0.0 0.0 0.0 0.0
Associates & JV Inc 39.2 11.5 5.92 7.33 2.24
Net Interest (Exp)/Inc (7.0) (16.7) (16.6) (15.2) (12.2)
Exceptional Gain/(Loss) 0.0 6.87 86.7 36.9 44.1
Pre-tax Profit 82.8 89.7 139 127 82.5
Tax (29.6) (27.9) (44.3) (40.1) (44.8)
Minority Interest 0.07 (0.6) (0.5) (0.4) 0.0
Net Profit 53.3 61.3 94.6 86.6 37.7
Net profit bef Except. 53.3 54.4 7.86 49.7 (6.5)
EBITDA 94.4 99.6 69.3 112 58.0
Growth
Revenue Gth (%) 48.3 (13.3) 65.7 (20.3) 4.5
EBITDA Gth (%) 25.5 5.4 (30.4) 61.0 (48.0)
Opg Profit Gth (%) (17.1) 74.0 (28.1) 54.8 (50.7)
Net Profit Gth (Pre-ex) (%) 46.7 2.1 (85.6) 532.2 (113.0)
Margins
Gross Margins (%) 8.8 16.3 7.1 14.6 7.5
Opg Profit Margins (%) 8.1 16.3 7.1 13.7 6.5
Net Profit Margins (%) 8.5 11.3 10.5 12.1 5.0
Balance Sheet (RMm)
FY Dec 2016A 2017A 2018F 2019F 2020F Net Fixed Assets 300 377 435 487 536
Invts in Associates & JVs 1,614 1,553 1,583 1,616 1,652
Other LT Assets 5,665 5,109 5,355 5,405 5,455
Cash & ST Invts 789 933 1,291 1,554 2,909
Inventory 585 610 627 700 256
Debtors 1,731 2,640 2,255 2,159 789
Other Current Assets 2,866 3,175 2,766 2,400 1,997
Total Assets 13,550 14,397 14,310 14,321 13,593
ST Debt
1,310 1,486 1,486 1,486 1,486
Creditor 804 889 801 880 301
Other Current Liab 497 496 496 496 496
LT Debt 2,404 2,734 2,534 2,334 2,134
Other LT Liabilities 1,342 1,361 1,361 1,361 1,361
Shareholder’s Equity 6,832 7,069 7,267 7,397 7,446
Minority Interests 362 363 365 367 369
Total Cap. & Liab. 13,550 14,397 14,310 14,321 13,593
Non-Cash Wkg. Capital 3,882 5,041 4,350 3,884 2,245
Net Cash/(Debt) (2,926) (3,287) (2,729) (2,266) (711)
Debtors Turn (avg days) 343.2 331.9 304.2 260.7 260.7
Creditors Turn (avg days) 166.1 120.9 127.8 115.8 245.0
Inventory Turn (avg days) 112.4 85.3 93.5 91.4 198.2
Asset Turnover (x) 0.1 0.2 0.2 0.2 0.1
Current Ratio (x) 2.3 2.6 2.5 2.4 2.6
Quick Ratio (x) 1.0 1.2 1.3 1.3 1.6
Net Debt/Equity (X) 0.4 0.4 0.4 0.3 0.1
Net Debt/Equity ex MI (X) 0.4 0.5 0.4 0.3 0.1
Capex to Debt (%) 0.7 2.1 2.2 2.3 2.4
Z-Score (X) 1.1 1.3 1.3 1.3 1.3
Source: Company, AllianceDBS
Mainly from land sales
Thin margin
Healthy gearing
Page 10
Company Guide
UEM Sunrise
Cash Flow Statement (RMm)
FY Dec 2016A 2017A 2018F 2019F 2020F
Pre-Tax Profit 218 439 386 284 144
Dep. & Amort. 24.0 25.3 30.2 34.8 39.0
Tax Paid (69.3) (157) (116) (85.2) (43.1)
Assoc. & JV Inc/(loss) (75.8) (27.0) (29.7) (32.7) (36.0)
Chg in Wkg.Cap. (994) (1,280) 691 467 1,639
Other Operating CF 187 849 (196) 0.0 0.0
Net Operating CF (710) (150) 765 668 1,742
Capital Exp.(net) (25.2) (87.6) (87.6) (87.6) (87.6)
Other Invts.(net) 0.0 (125) 0.0 0.0 0.0
Invts in Assoc. & JV 0.0 50.0 0.0 0.0 0.0
Div from Assoc & JV (248) 0.0 (50.0) (50.0) (50.0)
Other Investing CF 62.2 (15.2) 0.0 0.0 0.0
Net Investing CF (211) (178) (138) (138) (138)
Div Paid (85.3) 0.0 (70.0) (67.0) (49.2)
Chg in Gross Debt 946 541 (200) (200) (200)
Capital Issues 0.0 0.0 0.0 0.0 0.0
Other Financing CF (151) (175) 0.0 0.0 0.0
Net Financing CF 710 367 (270) (267) (249)
Currency Adjustments (5.0) (19.2) 0.0 0.0 0.0
Chg in Cash (217) 19.5 357 263 1,355
Opg CFPS (sen) 6.26 24.9 1.64 4.43 2.28
Free CFPS (sen) (16.2) (5.2) 14.9 12.8 36.5
Source: Company, AllianceDBS
Target Price & Ratings History
Source: AllianceDBS
Analyst: QUAH He Wei, CFA
S.No.Date of
Report
Closing
Price
12-mth
Target
Price
Rating
1: 18 May 17 1.29 1.25 HOLD
2: 13 Jun 17 1.27 1.25 HOLD
3: 24 Aug 17 1.16 1.25 HOLD
4: 31 Oct 17 1.11 1.25 HOLD
5: 01 Nov 17 1.12 1.25 HOLD
6: 21 Nov 17 1.06 1.10 HOLD
7: 13 Dec 17 1.04 1.10 HOLD
8: 03 Jan 18 1.17 1.10 HOLD
9: 28 Feb 18 1.09 1.10 HOLD
Note : Share price and Target price are adjusted for corporate actions.
1
2
34
5 6
7
8
9
0.92
0.97
1.02
1.07
1.12
1.17
1.22
1.27
1.32
1.37
Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18
RM
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AllianceDBS recommendations are based an Absolute Total Return* Rating system, defined as follows:
STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)
BUY (>15% total return over the next 12 months for small caps, >10% for large caps)
HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)
FULLY VALUED (negative total return i.e. > -10% over the next 12 months)
SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)
Share price appreciation + dividends
Completed Date: 22 Mar 2018 01:40:28 (MYT) Dissemination Date: 22 Mar 2018 14:37:09 (MYT)
Sources for all charts and tables are AllianceDBS unless otherwise specified.
GENERAL DISCLOSURE/DISCLAIMER
This report is prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). This report is solely intended for the clients of DBS Bank Ltd, its
respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in
any form or by any means or (ii) redistributed without the prior written consent of AllianceDBS Research Sdn Bhd (''AllianceDBS'').
The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS
Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively,
the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other
factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or
warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without
notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific
investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees
only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial
advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit)
arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not
to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons
associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have
positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and
other banking services for these companies.
Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can
be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments.
The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may
not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to
update the information in this report.
This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned
schedule or frequency for updating research publication relating to any issuer.
The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and
assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on
which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual
results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED
UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:
(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and
(b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk
assessments stated therein.
Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets.
Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies)
mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the
commodity referred to in this report.
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DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public
offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage
in market-making.
ANALYST CERTIFICATION
The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the
companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her
compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s)
primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the
issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real
estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the
management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or
his associate does not have financial interests2 in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has
procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of
research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment
banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment
banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the
DBS Group.
COMPANY-SPECIFIC / REGULATORY DISCLOSURES
1. DBS Bank Ltd, DBS HK, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), DBSV HK or their subsidiaries and/or other affiliates do not
have a proprietary position in the securities recommended in this report as of 28 Feb 2018.
2. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research
Report.
Compensation for investment banking services:
3. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a
manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further
information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document
should contact DBSVUSA exclusively.
Disclosure of previous investment recommendation produced:
4. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other
investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12
months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by
DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.
1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of
which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst.
2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.
Page 13
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RESTRICTIONS ON DISTRIBUTION
General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or
located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be
contrary to law or regulation.
Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd
(“DBSVS”). DBS holds Australian Financial Services Licence no. 475946.
DBSVS is exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001
(“CA”) in respect of financial services provided to the recipients. DBSVS is regulated by the Monetary Authority of Singapore
under the laws of Singapore, which differ from Australian laws.
Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.
Hong Kong This report has been prepared by an entity(ies) which is not licensed by the Hong Kong Securities and Futures Commission
to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of
the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong
Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated
activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).
For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected].
Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.
Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from
ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this
report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised
that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected
and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any
of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek
to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also
have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and
other services from the subject companies.
Wong Ming Tek, Executive Director, ADBSR
Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No.
198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the
Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign
entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial
Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert
Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons
only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from,
or in connection with the report.
Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd.
Page 14
Company Guide
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United
Kingdom
This report is produced by AllianceDBS Research Sdn Bhd which is regulated by the Securities Commission Malaysia.
This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised
and regulated by the Financial Conduct Authority in the United Kingdom.
In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and
associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any
form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at
persons having professional experience in matters relating to investments. Any investment activity following from this
communication will only be engaged in with such persons. Persons who do not have professional experience in matters
relating to investments should not rely on this communication.
Dubai
International
Financial
Centre
This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor,
Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank
Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for
professional clients (as defined in the DFSA rulebook) and no other person may act upon it.
United Arab
Emirates
This report is provided by DBS Bank Ltd (Company Regn. No. 196800306E) which is an Exempt Financial Adviser as defined
in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. This report is for information purposes
only and should not be relied upon or acted on by the recipient or considered as a solicitation or inducement to buy or sell
any financial product. It does not constitute a personal recommendation or take into account the particular investment
objectives, financial situation, or needs of individual clients. You should contact your relationship manager or investment
adviser if you need advice on the merits of buying, selling or holding a particular investment. You should note that the
information in this report may be out of date and it is not represented or warranted to be accurate, timely or complete. This
report or any portion thereof may not be reprinted, sold or redistributed without our written consent.
United States This report was prepared by AllianceDBS Research Sdn Bhd (''AllianceDBS''). DBSVUSA did not participate in its preparation.
The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated
persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation,
communications with a subject company, public appearances and trading securities held by a research analyst. This report is
being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be
distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and
qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any
securities referred to herein should contact DBSVUSA directly and not its affiliate.
Other
jurisdictions
In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified,
professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.
Page 15
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DBS Regional Research Offices
HONG KONG DBS Vickers (Hong Kong) Ltd Contact: Paul Yong 18th Floor Man Yee Building 68 Des Voeux Road Central Central, Hong Kong Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Participant of the Stock Exchange of Hong Kong
MALAYSIA AllianceDBS Research Sdn Bhd Contact: Wong Ming Tek (128540 U) 19th Floor, Menara Multi-Purpose, Capital Square, 8 Jalan Munshi Abdullah 50100 Kuala Lumpur, Malaysia. Tel.: 603 2604 3333 Fax: 603 2604 3921 e-mail: [email protected]
SINGAPORE DBS Bank Ltd Contact: Janice Chua 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel: 65 6878 8888 Fax: 65 65353 418 e-mail: [email protected] Company Regn. No. 196800306E
INDONESIA PT DBS Vickers Sekuritas (Indonesia) Contact: Maynard Priajaya Arif DBS Bank Tower Ciputra World 1, 32/F Jl. Prof. Dr. Satrio Kav. 3-5 Jakarta 12940, Indonesia Tel: 62 21 3003 4900 Fax: 6221 3003 4943 e-mail: [email protected]
THAILAND DBS Vickers Securities (Thailand) Co Ltd Contact: Chanpen Sirithanarattanakul 989 Siam Piwat Tower Building, 9th, 14th-15th Floor Rama 1 Road, Pathumwan, Bangkok Thailand 10330 Tel. 66 2 857 7831 Fax: 66 2 658 1269 e-mail: [email protected] Company Regn. No 0105539127012 Securities and Exchange Commission, Thailand