PROPERTY

UEM SUNRISE
(UEMS MK EQUITY, ULHB.KL) 8 Feb 2021

Expect to turn around in FY21

Company report HOLD
AmInvestment Bank (Maintained)
www.amequities.com.my
03 2036 2300 Rationale for report: Company update

Investment Highlights
Price RM0.40
Fair Value RM0.43
52-week High/Low RM0.66/RM0.28  We maintain HOLD recommendation on UEM Sunrise
(UEMS) with a lower fair value of RM0.43 per share
Key Changes
(previously RM0.45) based on a 60% discount to its RNAV
Fair value 
(Exhibit 1). We project a net loss of RM18.5mil in its FY20
EPS 
(vs. profit of RM74.1mil) as we believe its earnings
YE to Dec FY19 FY20F FY21F FY22F performance continues to be weak. We cut our FY21/22
estimates by 22.4%/6.0% to reflect the timing of recognition
Revenue (RM mil) 2,909.5 846.2 1,838.7 2,231.2 and impact of the movement control order (MCO) 2.0. UEMS
Core net profit (RM mil) 278.4 (18.5) 93.0 116.4 is scheduled to announce its 4Q results on 24 Feb 2021.
FD Core EPS (sen) 5.5 (0.4) 1.8 2.3
FD Core EPS growth (%) (14.2) (106.6) (602.9) 25.1  To recap, UEMS posted a 9MFY20 core net loss of RM134mil
Consensus Net Profit (RM - (14.9) 80.4 103.8
(vs. core net profit of RM149.1 mil in 9MFY19). This was also
DPS (sen) 0.9 0.0 0.9 0.9 the first losses incurred since its listing in 2008. 9MFY20
PE (x) 7.3 (109.4) 21.8 17.4 revenue dived by 70% YoY mainly due to a slower project
EV/EBITDA (x) 9.2 32.2 15.8 13.3 progress completion as a result of the Covid-induced MCO.
Div yield (%) 2.2 0.0 2.2 2.2
ROE (%) 3.2 (0.3) 1.3 1.6
 UEMS unbilled sales stood at RM1.7bil as of 9MFY20,
whereby 74% comprised local projects. Year to date, UEMS
Net Gearing (%) 32.0% 30.2% 36.7% 37.9%
has launched projects worth RM900mil in gross
Stock and Financial Data development value (GDV), which is near its target GDV of
RM1bil for FY20. 9MFY20’s total sales of RM374mil was
Shares Outstanding (million) 5,058.5 below its RM1bil target for FY20. Nonetheless, management
Market Cap (RM mil) 1,998.1 guided stronger sales in 4QFY20 contributed by Australian
Book Value (RM/share) 1.40 project and land sale in Johor.
P/BV (x) 0.3
ROE (%) 4.0
Net Gearing (%) 50.9
 UEMS has 18 ongoing projects, mainly residential
developments in Iskandar Puteri, Johor, with 7 of them
Major Shareholders Khazanah Nasional (66.1%) being JV with third parties. One of the key projects in the
LTH (7.7%) central region is Kiara Bay, Kepong. This latest township
EPF (3.6%) development is 72 acres in land size with a GDV of RM15bil.
Free Float 26.2
2.2
We are positive on the development due to its strategic
Avg Daily Value (RM mil)
location next to the MRR2, near Kepong Metropolitan Park.
Price performance 3mth 6mth 12mth It also contains a mix of retail stores, and educational and
health centres.
Absolute (%) 8.2 (3.7) (34.2)
Relative (%) (0.1) (4.3) (36.7)  Moving forward, UEMS is planning to launch low-cost
residential units in Cheras in 4Q2021, with an indicative
1.4 2,000 GDV of RM1.1bil.
1,800
1.2
1,600  Despite a weak 9MFY20, we expect a better 4QFY20 with the
1.0 1,400 recognition of A$125mil (RM365.5mil) from the disposal of
0.8
1,200 Aurora Melbourne Central. However, we expect UEMS to
1,000 still record losses in FY20 of RM18.5mil, albeit narrower
0.6
800 than 9MFY20. We trim our FY21–22 net earnings forecasts
0.4 600 to RM93mil and RM116.4mil respectively while assuming a
400 net loss of RM18.5mil in FY20.
0.2
200
0.0 0
 Nevertheless, we believe UEMS’ long-term outlook remains
Feb-16 Feb-17 Feb-18 Feb-19 Feb-20 stable premised on its unbilled sales of RM1.7bil while its
FY21–22 earnings will be mainly supported by the disposals
UEMS MK FBMKLCI Index of land and a higher GDV target of RM1.2bil in 2021. At its
last price of RM0.40, the stock offers little upside. Maintain
HOLD.
UEM Sunrise 8 Feb 2021

EXHIBIT 1: RNAV CALCULATIONS

Outstanding NPV Outstanding NPV
DEVELOPMENT PROPERTIES GDV @19% Stake JV PROJECTS - ON-GOING GDV @19% Stake
(RMmil) (RMmil) (RMmil) (RMmil)
Southern Region Southern Region
East Ledang 1,466.1 9.9 100% Mall of Medini 2,097.0 4.3 55% SUMMARY NAV (RM mil)
Nusa Idaman 932.9 6.3 100% Horizon Hills 1,685.3 2.9 50% Development Projects 396.3
Nusa Bayu 441.0 3.0 100% Emerald Bay 3,075.8 3.3 40% JV Projects 90.9
Almas, Puteri Harbour 1,776.9 12.0 100% Nusajaya Tech Park 3,158.0 3.4 40% Net cash / (debt) (2,329.4)
Estuari, Puteri Harbour 3,382.1 22.9 100% The Maris, Desaru 2,852.3 5.0 51% Total RNAV 5,444.0
Aspira LakeHomes, Gerbang Nusajaya 257.1 1.7 100% Less 60% discount (3,266.4)
Aspira Square 8.6 0.1 100% Central Region Fair value 2,177.6
Aspira Gardens (Cassia) 73.9 0.5 100% Seremban Forest Heights 1,547.2 2.6 50%
Radia Bukit Jelutong 1,013.4 1.7 50% FD no of shares (mil) 5,058.5
Central Region Fair value per share (RM) 0.43
Serene Heights Bangi 3,113.3 21.1 100%
Solaris Parq, Dutamas 2,000.2 13.6 100% JV PROJECTS - PIPELINE
Kiara Bay, Kepong @50% 14,348.2 97.2 200% Southern
Residential South 2,827.4 12.3 80%
PIPELINE PROJECTS The Waves (CS3) - Puteri Harbour 1,201.0 2.0 50%
Southern Region Gerbang Nusajaya - Mulpha JV (UEMS Land) 2,771.0 4.7 50%
Gerbang Nusajaya 25,898.1 175.5 100% Gerbang Nusajaya - Mulpha JV (Mulpha Land)2,586.3 4.4 50%
Gerbang Nusantara 485.2 3.3 100% Gerbang Nusajaya - KLK 5,000.0 5.4 40%
Senadi Hills 399.2 2.7 100% Gerbang Nusajaya - Fastrackcity 3,700.0 2.3 30%
Fraser Metropolis 15,000.0 36.6 60%
Central Region
Equine Land, Sri Kembangan 722.3 4.9 100% Total 48,514.7 90.9
Angkasa Raya 1,903.6 12.9 100%
MK 31 742.0 5.0 100%
Allevia 541.8 3.7 100%

Total 58,492.5 396.3

Source: AmInvestment Bank Bhd

EXHIBIT 2: PB BAND CHART EXHIBIT 3: PE BAND CHART

1.00 100.00

0.90
+1δ
50.00
0.80
+1δ
0.70
0.00
Avg
0.60
Avg
0.50 -50.00

0.40 -1δ
-1δ
-100.00
0.30

0.20 -150.00
0.10

0.00 -200.00
Jan-17
Mar-17
May-17
Jul-17
Sep-17
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
Jan-19
Mar-19
May-19
Jul-19
Sep-19
Nov-19
Jan-20
Mar-20
May-20
Jul-20
Sep-20
Nov-20
Jan-21

-250.00

AmInvestment Bank Bhd 2

UEM Sunrise 8 Feb 2021

EXHIBIT 4: FINANCIAL DATA

Income Statement (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F

Revenue 1,860.6 2,044.0 2,909.5 846.2 1,838.7

EBITDA 274.4 547.1 471.0 131.2 297.9
Depreciation/Amortisation (25.2) (27.0) (47.1) (24.7) (42.9)
Operating income (EBIT) 249.2 520.1 423.9 106.5 255.0
Other income & associates 36.1 41.4 20.3 3.1 9.3
Net interest (91.1) (101.0) (106.8) (124.3) (135.0)
Exceptional items - (44.5) (54.6) - -
Pretax profit 194.1 416.0 337.4 (14.7) 129.3
Taxation (87.1) (135.6) (161.9) (2.9) (33.6)
Minorities/pref dividends (1.5) (0.5) 1.1 (0.9) (2.7)
Net profit 105.6 280.0 176.7 (18.5) 93.0
Core net profit 105.6 324.5 231.2 (18.5) 93.0

Balance Sheet (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F

Fixed assets 377.1 445.6 456.1 478.9 502.8

Intangible assets 621.4 621.4 621.4 621.4 621.4
Other long-term assets 6,040.5 7,599.0 8,632.5 8,432.5 8,226.5
Total non-current assets 7,039.0 8,666.0 9,710.0 9,532.8 9,350.7
Cash & equivalent 808.0 1,078.6 1,057.5 872.1 877.8
Stock 609.7 1,302.7 954.8 266.3 616.3
Trade debtors 2,640.5 948.8 641.7 371.0 605.8
Other current assets 3,300.2 2,127.9 1,106.9 925.0 1,740.8
Total current assets 7,358.4 5,458.0 3,760.9 2,434.4 3,840.7
Trade creditors 888.6 845.8 1,069.2 304.6 652.9
Short-term borrowings 1,485.5 2,288.7 1,049.0 1,090.2 1,097.3
Other current liabilities 495.5 384.4 340.8 289.9 314.4
Total current liabilities 2,869.6 3,518.9 2,458.9 1,684.7 2,064.5
Long-term borrowings 2,734.2 2,394.8 2,337.9 1,978.1 2,468.6
Other long-term liabilities 1,361.4 769.7 919.6 900.5 1,047.0
Total long-term liabilities 4,095.6 3,164.5 3,257.5 2,878.6 3,515.6
Shareholders’ funds 7,069.0 7,076.9 7,286.2 7,267.7 7,315.3
Minority interests 363.1 363.7 468.3 136.2 296.0
BV/share (RM) 1.56 1.40 1.44 1.44 1.45

Cash Flow (RMmil, YE 31 Dec) FY17 FY18 FY19F FY20F FY21F

Pretax profit 194.1 416.0 337.4 (14.7) 129.3

Depreciation/Amortisation 25.2 27.0 47.1 24.7 42.9
Net change in working capital (1,400.0) 2,017.1 1,855.7 325.8 (1,027.9)
Others 1,024.6 (2,327.3) (579.6) (379.0) 227.1
Cash flow from operations (156.1) 132.8 1,660.6 (43.2) (628.6)
Capital expenditure (81.7) (58.0) (35.9) (22.8) (23.9)
Net investments & sale of fixed assets (20.0) - - - -
Others (70.2) (162.1) (88.0) 200.0 206.0
Cash flow from investing (171.9) (220.1) (124.0) 177.2 182.1
Debt raised/(repaid) 543.8 535.3 - (318.6) 497.6
Equity raised/(repaid) - - - - -
Dividends paid - (53.3) - - (45.4)
Others (177.2) (195.6) (1,461.3) - -
Cash flow from financing 366.7 286.3 (1,461.3) (318.6) 452.3
Net cash flow 38.7 199.0 75.4 (184.6) 5.7
Net cash/(debt) b/f 788.5 805.7 980.8 1,056.7 872.1
Net cash/(debt) c/f 805.7 980.8 1,056.7 872.1 877.8

Key Ratios (YE 31 Dec) FY17 FY18 FY19F FY20F FY21F

Revenue growth (%) 1.0 9.9 42.3 (70.9) 117.3

EBITDA growth (%) 12.6 99.3 (13.9) (72.2) 127.1
Pretax margin (%) 10.4 20.4 11.6 (1.7) 7.0
Net profit margin (%) 5.7 13.7 6.1 (2.2) 5.1
Interest cover (x) 2.7 5.2 4.0 0.9 1.9
Effective tax rate (%) 44.8 32.6 48.0 20.0 26.0
Dividend payout (%) 43.0 16.2 25.7 nm 48.8
Debtors turnover (days) 518 169 81 160 120
Stock turnover (days) 117 171 142 263 88
Creditors turnover (days) 164 155 120 296 95

Source: Company, AmInvestment Bank Bhd estimates

AmInvestment Bank Bhd 3

UEM Sunrise 8 Feb 2021

DISCLOSURE AND DISCLAIMER

This report is prepared for information purposes only and it is issued by AmInvestment Bank Berhad (“AmInvestment”) without
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AmInvestment Bank Bhd 4