KUALA LUMPUR (May 29): Shares in UEM Sunrise Bhd (KL:UEMS) fell to their lowest in three weeks, after the real estate developer reported that its first-quarter net profit nearly halved from a year earlier.
The counter declined as much as 6.1% or seven sen to RM1.08, its lowest since May 7, on Wednesday. It managed to pare losses to close at RM1.10 — still by five sen or 4.35% — valuing the company at RM5.56 billion on Bursa Malaysia. The counter saw some 15.7 million shares change hands.
On Tuesday (May 28), the group announced that its net profit for the three months ended March 31, 2024 (1QFY2024) was RM8.18 million compared to RM15.35 million over the same period in the prior year, amid a drop in sales and higher operating expenses, while revenue slipped 6.57% year-on-year to RM224.96 million, from RM240.78 million.
Analysts, meanwhile, anticipate that UEM Sunrise’s earnings will improve in the upcoming quarters, as more projects are slated for roll-out, alongside an anticipated increase in the number of non-core land disposals.
“We expect new launches and some non-core land disposals (potentially amounting to RM1 billion), as well as land monetisation via strategic partnerships, to lift earnings in the second half,” said RHB Investment Bank in a note to clients.
“We believe some strategic deals may also materialise in the coming weeks,” it said, adding that UEM Sunrise remains as a good proxy for Iskandar Malaysia’s multi-year growth story.
UEM Sunrise has one “buy” call, two “hold” calls and five “sell” ratings, with a 12-month target price of RM1, Bloomberg data showed.
According to Hong Leong Investment Bank, UEM Sunrise’s near-term earnings are expected to be driven by their projects in the Klang Valley.
Regarding the Johor property market, the research firm noted that it presents a promising long-term opportunity for UEM Sunrise, due to favourable economic conditions and infrastructure developments. However, this potential is not expected to reflect in the company’s earnings over the next two- to three years, as the scaling up of launches in Johor is progressing at a moderate pace, amid the revision of the Gerbang Nusajaya township masterplan, it said.