Maybank IB believes Sunway’s latest land acquisition (5 acres) at Plantation Close, Tengah, with its long-time JV partner, Hoi Hup, will help to diversify its property business geographically and tap into the steady demand for Executive Condominiums in Singapore. Maybank IB estimates the project GDV to be SGD676m (x3.5 RM2.3b)
The project will only start contributing in 2028; hence, the house maintains its FY24-25 earnings forecasts. The TP is based on 0.9x FY24E P/B; this, and stock rating are under review pending the release of Sunway’s 4QFY23 results on 21 Feb.
The Housing and Development Board of Singapore has awarded a 5-acre land parcel at Plantation Close, Tengah for a 99-year lease term Executive Condominium Housing Development at SGD423.4m (or SGD701 psf ppr) to a 65:35 Hoi Hup:Sunway JV company. The house understand that there were four bidders for the said land and HHSJV’s bid was 1.6% higher than the next highest offer of SGD690 psf ppr. To recap, Hoi Hup-Sunway had bid for another piece of land nearby at SGD703 psf ppr in June 2023.
More details on the land
The land is within close proximity (within 1km) to Chinese Garden MRT station and future Tengah Plantation and Tengah Park MRT station. Maybank said it understands that the first EC project in Tengah was sold at SGD1,300 psf while the latest EC project, namely Lumina Grand by CDL at Bukit Batok, is selling at SGD1,464 psf ASP. Hence, the latest project by HHSJV at Tengah could be launched in the range of SGD1,400-1,500 psf.
Earnings contributions to come in 2028
The new project could churn out a net profit of MYR101m (+2sen EPS) assuming: a GDV of SGD676m based on ASP of SGD1,400 psf, a pretax margin of 12%, Sunway’s 35% stake in the project, and an exchange rate of MYR3.55/SGD. The project is slated to be launch by mid-2025 and earnings will only come in from 2028 onwards.
