KUALA LUMPUR (Aug 16): PublicInvest Research downgraded UEM Sunrise Bhd to an "underperform", as it believes that Johor — which is home to the largest residential property overhang in the country — will need more time to digest the supply glut.
The research house, however, raised its target price for the property developer to 42 sen from 33 sen earlier to narrow the valuation discount to about 0.65 times its net tangible assets.
Noting that the share price had exceeded its earlier estimates after the proposal to revive the High Speed Rail between Kuala Lumpur and Singapore was mooted in July, PublicInvest Research said it is currently trading at close to 30 times consensus forecast earnings for the financial year ending Dec 31, 2024 (FY2024).
Meanwhile, the research outfit maintained its earnings estimates for UEM Sunrise after the group announced that it intends to build 430 apartments on its new Subiaco East site in Perth, Western Australia.
On Tuesday (Aug 15), the group announced that it had acquired the 1.22-acre (0.49-hectare) site for A$22.2 million, or about RM66.8 million, from DevelopmentWA.
Currently, PublicInvest Research estimated UEM Sunrise's net profit at RM80.9 million for FY2023, RM86 million for FY2024, and RM92.5 million for FY2025, underpinned by revenue of RM1.01 billion for the three years.
At the time of writing on Wednesday, UEM Sunrise had risen 1.5 sen or 2.63% to 58.5 sen a share, with a market capitalisation of RM2.93 billion.