News by AmInvestment Bank

Its 1QFY20 core net profit only grew 1% year-on-year, as better showing from property (strong sales and firm margins in Vietnam) was offset by weaker performance from construction (the downsized Mass Rapid Transit Line 2 [MRT2] contract) and concessions (the absence of contribution from Syarikat Pengeluar Air Sungai Selangor Sdn Bhd [Splash] following its disposal).

FY19 earnings were largely contributed by: i) Eco Majestic, Eco Forest, Eco Sanctuary and Eco Sky in the Klang Valley; ii) Eco Botanic, Eco Spring, Eco Summer, Eco Business Park I, Eco Business Park II, Eco Tropics and Eco Business Park III in Iskandar Malaysia; and iii) Eco Meadows and Eco Terraces in Penang.

Its 9MFY19 earnings were largely contributed by Eco Majestic, Eco Forest, Eco Sanctuary and Eco Sky in Klang Valley; Eco Botanic, Eco Spring, Eco Summer, Eco Business Park I, Eco Business Park II, Eco Tropics and Eco Business Park III in Iskandar Malaysia; and Eco Meadows and Eco Terraces in Penang.

The prolonged US-China trade tensions and a mounting global recession risk have triggered a selldown in global equity markets, including Malaysia’s.

The company’s most recent launches, Phase A1 of Setia Safiro and Phase 1 of Setia Mayuri, were sold out during their launches this month.

In India, SunCon has reopened an office and working on tenders for three toll-road projects worth about RM1 billion each. In Myanmar, SunCon via a joint venture (JV) with local conglomerate Capital Diamond Star Group, stands a good chance of winning a building job worth RM200 million to RM300 million for the maiden phase of a mixed project in Mandalay.

Pavilion REIT’s first quarter of financial year 2019 (1QFY19) distributable income of RM72.2 million (+3.5% year-on-year [y-o-y]) came in within expectations at 25.6% and 26.5% of our full-year forecast and full-year consensus estimates respectively.

Retail properties remain the key driver for Sunway REIT, especially the Sunway Pyramid Mall contributing 56% of total net property income.

The group’s property development division reported an FY18 revenue of RM619.6 million (-31.8% y-o-y) and profit before tax (PBT) of RM158.6 million (-32.6%) mainly due to the adoption of the Malaysian Financial Reporting Standards (MFRS) 15 whereby profits of property development projects in Singapore and China can only be recognised upon completion.

Its quick turnaround business model limits its exposure to land withholding risks, resulting in better cash flow management.