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PP 7767/09/2010(025354)

14 May 2010
Corporate Highlights
Malaysia RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Re su lt s/B r ief ing No te Company No: 233327 -M

14 May 2010

Share Price : RM2.08

9MFY06/10 Performance Weighed Down By Slower Fair Value : RM2.76
Progress Billings Recom : Outperform

Table 1 : Investment Statistics (SUNRISE; Code: 6165) Bloomberg: SUN MK

Net Net
FYE Turnover profit EPS Growth PER C.EPS* P/CF P/NTA ROE Gearing GDY
June (RMm) (RMm) (sen) (%) (x) (sen) (x) (x) (%) (%) (%)
2009 803.9 136.8 27.9 10.4 7.4 - (40.1) 1.1 19.2 0.5 1.4
2010f 762.7 142.3 28.7 2.9 7.2 34.0 6.1 0.9 13.7 0.4 1.4
2011f 798.3 156.1 31.5 9.7 6.6 36.0 6.9 0.8 13.2 0.3 1.4
2012f 890.4 165.5 33.4 6.0 6.2 40.0 7.7 0.7 12.5 0.3 1.4
Main Market Listing /Trustee Stock/ Syariah Approved Stock By The SC # Normalised * Consensus Based On IBES Estimates
RHBRI Vs. Consensus
♦ Below expectations. 9MFY06/10 results came in below expectations, only In Line
accounting for 58-59% of our full-year forecast and the full-year market Below
consensus. We believe variance against our forecast came largely from the
slower-than-expected progress billings at MK28, its RM998m condominium Issued Capital (m shares) 495.4
Market Cap(RMm)
project in Mont Kiara, despite strong take-up achieved (50%). Excluding 1,030.4
Daily Trading Vol (m shs) 0.3
RM19.4m disposal gains from the sale of Plaza Mont Kiara office space and an
52wk Price Range (RM) 1.51-2.65
Australian asset in 1HFY06/09, 9MFY06/10 net profit still grew 1.8% yoy
Major Shareholders: (%)
thanks to improved margins with its product mix shifting towards high-margin
Casa Unggul Sdn Bhd 24.0
MK11 (RM903m condominium) and The Residence (RM120m bungalow Dato' Allan Lim Kim Huat 7.2
project). As at Apr 10, its unbilled sales stood at RM907m, translating to EPF 12.1
1.1x of our FY10 revenue forecast. Of this, 62% came from MK11, 35% from
MK28 and 3% from other projects. FYE June FY10 FY11 FY12

♦ Key takeways from analysts’ briefing. These are:

EPS chg (%) (12.6) (12.9) (13.1)
Var to Cons (%) (15.5) (12.5) (16.5)
1. Its unbilled sales will increase further to RM1.07bn (or 1.3x of our FY10
revenue forecast) after taking into account RM164m sales pending S&P PE Band Chart
signing (89% from MK28);
2. Key projects from its new property project in Kajang will be landed
PER = 12x
properties such as villa terraces, semi-detached and detached homes with PER = 9x
an estimated GDV of RM700m. Assuming 3-year development period and PER = 6x
PER = 3x
a margin of 20%, the project is expected to boost FY06/12 earnings by
about 20%;
3. MK28 has achieved a 50% take-up rate (RM494m sales) within four
months after the soft launch in Dec 2009, thanks to an improving
property market as well as attractive financial packages offered by the
Relative Performance To FBM KLCI
developer (10/90 scheme with 5-year zero payment scheme). This beats
our assumption of only a 20% take-up rate in FY06/10; and
4. Strata office development project Solaris Tower with a floor area of
570,000 sq ft and estimated GDV of RM450m will be launched by 2HCY10.
We are not overly excited on this project in view of the huge incoming
office supply in the Klang Valley. We have only assumed a 20% take-up
rate for this project in FY06/11. FBM KLCI

♦ Risks. The risks include: 1) concentration risk as most of its existing projects
are located in Mont Kiara; 2) competition from peers; 3) delays in launches
and approvals; and 4) country risk.
♦ Forecasts. We cut our FY10-12 forecasts by 12.6-13.1% to factor in slower-
than-expected progress billings in MK28, partly offset by a better take-up
rate. Joshua CY Ng
♦ Investment case. We like Sunrise as it is good proxy to the recovering (603) 92802237
property sector, particularly, the high-end segment. Indicative fair value is
maintained at RM2.76, or 30% discount to its RNAV/share of RM3.94.
Maintain Outperform.

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Table 2. Sunrise Quarterly Results

FYE June (RMm) 3Q09 2Q10 3Q10 9M09 9M10 Comments
(%) (%) (%)
Turnover 165.2 158.3 112.2 (29.2) (32.1) 566.6 460.7 (18.7) Yoy decline was due to completion
of Meridin, MK10 and part of Solaris
Dutamas. As at Apr 2010, its
unbilled sales stood at RM907m or
1.1x of our FY10 revenue forecast.
This excluded RM164m sales
pending S&P signing (from MK28,
MK11 and The Residence).
EBIT 43.8 48.2 32.8 (31.9) (25.1) 155.0 132.4 (14.6) EBIT margin improved from 27.4%
to 28.7% due to higher
contributions from high-margin
projects e.g. MK11 and The
Net int inc/(exp) (0.8) (1.0) (1.3) 19.6 57.0 (2.4) (3.6) 50.7 Net gearing dropped from 0.36x in
2Q10 to 0.33x in 3Q10 due to
strong cash flow from The
Residence and MK11. The company
hopes to be in net cash within four
Associates (0.3) 0.0 (0.3) (806.3) 19.8 (0.5) (0.2) (58.3)
Pre-tax profit 42.7 47.2 31.2 (33.8) (26.9) 152.1 128.6 (15.5)
Taxation (12.2) (12.7) (7.7) (39.0) (36.6) (39.0) (33.4) (14.5)
Minorities 0.0 0.0 0.0 10.0 (26.7) (0.1) 0.1 (172.5)
Net profit 30.6 34.5 23.5 (31.9) (23.1) 113.0 95.3 (15.7) Excluding RM19.4m disposal gains
from the sale of office space in
Plaza Mont Kiara and an Australian
asset in FY09, 9M10 net profit only
grew 1.8% yoy. This was below our
and consensus estimates.
Net EPS (sen) 6.1 7.0 4.8 (31.9) (22.5) 23.2 19.2 (17.0)
Margins (%)
EBIT 26.5 30.4 29.2 27.4 28.7
Pretax 25.8 29.8 27.8 26.9 27.9
Net profit 18.5 21.8 21.0 20.0 20.7
Tax rate (28.5) (26.8) (24.7) (25.6) (25.9)

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Table 3. Earnings Forecasts Table 4 :RNAV Estimate

FYE June (RMm) FY09 FY10F FY11F FY12F
Land Mkt Value Bk Value Surplus
Revenue 803.9 762.7 798.3 890.4 Location (acres) (RMm) (RMm) (RMm)
Gross profit 251.7 218.3 237.9 251.9 Mont Kiara 72.9 1,270.6 431.1 839.5
Interest expenses (4.4) (25.2) (25.7) (23.9) Kajang 58.0 138.9 131.3 7.6
PBT 205.8 189.8 208.2 220.7 Mersing, Johor 431.1 0.0 20.3 (20.3)
Tax (49.4) (47.4) (52.0) (55.2) Cheras 2.4 7.2 0.8 6.4
Net profit 136.8 142.3 156.1 165.5 Canada 4.8 116.0 115.9 0.1
EPS (sen) 27.9 28.7 31.5 33.4 833.2
Revaluation surplus
DCF for MK11 32.0
Source: Company data, RHBRI estimates 5.5
DCF for The Residence
DCF for MK28 45.4
DCF for Solaris Towers 18.0
DCF for Canada project 24.3
DCF for Bukit Jelutong 16.4

Plaza Mont' Kiara - office 8.0 6.8 1.2

Angkasaraya 167.7 166.4 1.4
40.7 40.7 (0.0)
Solaris MK

Add: FY09 shareholder 974.5

Total asset value 1,951.8
No of shares (m) 495.4
RNAV per share (RM) 3.94


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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
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Industry/Sector Ratings

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

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

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