Sunland Group - 24 Dec 2007

ab Global Equity Research
Australia
Real Estate
UBS Investment Research
12-month rating Buy
Sunland Group Prior: Not Rated
12m price target A$4.95/US$4.25
-
Initiation of coverage: Dubai the key to Price A$4.25/US$3.65
growth; Buy RIC: SDG.AX BBG: SDG AU
24 December 2007
Significant growth since listing in 1995
Sunland Group (ASX code SDG) is a low-geared (12% D/TA) A$1.4bn S&P/ASX Trading data (local/US$)
200 developer undertaking residential, commercial and hotel development, project 52-wk range A$4.57-3.10/US$4.24-2.56
management and funds management. The business was founded in Australia in Market cap. A$1.36bn/US$1.17bn
1983 and expanded into Dubai in December 2004. Shares o/s 321m (ORD)
Free float 100%
Delivery of Dubai business is key
Avg. daily volume ('000) 750
We expect Dubai to quickly rise to c51% of EBIT by FY09E with Sunland
involved in five Dubai projects (3,014 lots, end value A$3.5bn) and as project Avg. daily value (A$m) 3.2
manager on the A$4bn White Bay project. Delivery and growth of the Dubai
Balance sheet data 06/08E
operations is premised on adequately managing JV relationships, human resources,
Shareholders' equity A$0.56bn
economic risks and project completion timing, and (important given strong
inflation) budgets. P/BV (UBS) 2.4x
Net Cash (debt) (A$0.12bn)
What Sunland offers at current prices
Sunland is trading at 11.3x FY09E P/E (versus the emerging industrials at 14.5x) Forecast returns
and offers a 3.5% FY09E DPS yield (emerging industrials c5.1%), and we estimate Forecast price appreciation +16.5%
a five-year EPS CAGR (FY08-13E) of 11.6% pa, underpinned by the Dubai Forecast dividend yield 5.3%
business. Forecast stock return +21.8%
Market return assumption 11.6%
Valuation – Initiating with a Buy rating
Forecast excess return +10.2%
Our three-stage DCF (calculated discounting diluted EPS) derives a one-year price
target of $4.95 (beta 1.19 as observed, with five- to ten-year and terminal EPS EPS (UBS, A$)
growth of 3.75% and 2.5%, respectively). This matches our secondary FY09E 06/08E 06/07
SOTP valuation of $4.95 using a weighted EBITDA multiple of 12.9x. We From To Cons. Actual
therefore initiate coverage with a Buy rating. H1E - 0.072 - 0.118
H2E - 0.081 - 0.188
06/08E - 0.298 0.289
Highlights (A$m) 06/06 06/07 06/08E 06/09E 06/10E 06/09E - 0.377 0.347
Revenues 489 630 526 481 573
EBIT (UBS) 123 166 131 153 209 Performance (A$)
Net Income (UBS) 72 88 95 120 169 5.00
Stock Price (A$) Rel. All Ordinaries
200
EPS (UBS, A$) 0.289 0.297 0.298 0.377 0.532 4.00

Net DPS (UBS, A$) 0.120 0.126 0.140 0.177 0.250 150
3.00
100
Profitability & Valuation 5-yr hist av. 06/07 06/08E 06/09E 06/10E 2.00
EBIT margin % - 26.4 24.8 31.7 36.4 1.00

50
ROIC (EBIT) % - 27.6 22.6 20.3 24.9

0.00 0
EV/EBITDA (core) x - 6.5 10.6 9.8 7.6
10/04
01/05
04/05
07/05
10/05
01/06
04/06
07/06
10/06
01/07
04/07
07/07
10/07
PE (UBS) x - 10.5 14.3 11.3 8.0 Stock Price (A$) (LHS) Rel. All Ordinaries (RHS)
Net dividend yield % - 4.0 3.3 4.2 5.9 Source: UBS

Source: Company accounts, Thomson Financial, UBS estimates. (UBS) valuations are stated before goodwill, exceptionals and other special items. www.ubs.com/investmentresearch
Valuations: based on an average share price that year, (E): based on a share price of A$4.25 on 20 Dec 2007 23:38 EST
John Freedman Chad Mikhael

Analyst Analyst
john.freedman@ubs.com Chad.Mikhael@ubs.com
+61-2-9324 2453 +61-2-9324 3547
This report has been prepared by UBS Securities Australia Ltd

ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 40.
UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may
have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making
their investment decision.
Sunland Group 24 December 2007
Contents page John Freedman

Analyst
Executive summary 3 john.freedman@ubs.com
+61-2-9324 2453
Financial forecasts 9
Chad Mikhael
— EPS and DPS profile .............................................................................................. 9 Analyst
Valuation and recommendation 10 Chad.Mikhael@ubs.com
+61-2-9324 3547
— Three-stage DCF valuation on earnings of $4.95 ................................................ 10
— SOTP valuation (EBITDA multiples) $4.95........................................................... 11
Group overview 12
— History .................................................................................................................. 12
— Divisions ............................................................................................................... 12
— Organisational structure ....................................................................................... 14
— Senior management overview .............................................................................. 14
— Capital structure ................................................................................................... 15
— Capital management ............................................................................................ 15
— Stock performance ............................................................................................... 16
Recent results and growth 17
Australian operations 19
— Multi-storey/Apartments (46% of FY08E EBIT) .................................................... 19
— Land subdivision (17% of FY08E EBIT) ............................................................... 20
— Residential housing (9% of FY08E EBIT) ............................................................ 22
— Commercial/Industrial development (1% of FY08E EBIT) ................................... 24
— Funds management (6% of FY08E EBIT) ............................................................ 25
— Hotel investments and operations (1% of FY08E EBIT) ...................................... 26
International operations 28
— Overview............................................................................................................... 28
— Development operations....................................................................................... 28
— Project management ............................................................................................ 29
— Funds management.............................................................................................. 29
UAE and Dubai overview 31
— Region overview (UAE) ........................................................................................ 31
— Dubai .................................................................................................................... 34
Summary 38
UBS 2
Executive summary
Overview: Sunland Group (ASX code SDG; market cap. A$1.37bn, free float
c70%) is an integrated developer in the S&P/ASX 200. It has operations across
property development (both multi-storey and residential), residential land
subdivision, project management, hotel development and ownership as well as
funds management. Sunland was founded in Queensland, Australia in 1983 and
has operations across eastern Australia (Queensland, Victoria and New South
Wales) and in Dubai (residential and hotel development since December 2004).
Sunland’s current share price is up 17.3% YTD to $4.25, driven by its continued
expansion into Dubai. Its track record for growth and returns is strong with a
DPS five-year CAGR (FY03-07) of 35% pa.
Chart 1: FY08E EBIT split by division Chart 2: FY07 EBIT/revenue margins split by division
Funds Mgmt International 70% 65%

Comm & Ind 60% FY07a FY08e
6% Dev (incl proj 60%
Ops.
serv ices) 50%
1%
21% 37%
40%
Hotel 30%
26%
1% Urban Land 30% 22% 25% 25%
Dev . 20% 12%

8% 8% 7%
17% 10%
Multi-Storey
Resid. 0%
46%
Subdivision
Hotel Inv. &
Housing
Funds
Multi-Storey
Total SDG
Mgmt
Housing
group
Op's.
Land
9%
Source: UBS estimates Source: Sunland, UBS estimates
Gearing remains low: Sunland has gross assets of $780m, with very low
gearing (debt to assets of 12.6%; or net debt/assets of nil). Sunland’s NTA as at
June 2007 is $2.49, excluding deferred tax assets and liabilities. Sunland is
currently trading at a large premium to NTA, given the value of its pipeline and
value attributed to its corporate businesses.
Dubai – the key to future growth: Sunland first expanded its development Dubai pipeline – 3,014 multi-storey/
operations into Dubai in December 2004. Presently, it has 3,014 multi- apartment lots spread across five
storey/apartment lots spread across five projects. Further, it is project managing projects
the White Bay community masterplan project. The founder of Sunland Group,
Mr Soheil Abedian, is now based in Dubai to oversee operations in his role as
Managing Director of Sunland Group International.
In FY07, EBIT earned from Dubai operations was just 4%. Based on our
estimates, we expect this to grow to 21% by FY08E and 51% by FY09E.
Effective delivery and future growth of Sunland’s Dubai operations is premised
on several factors:
(1) Joint venture relationships – Sunland has already established a joint

venture with Emirates Investment Group (EIG) to construct resorts, and
residential and commercial projects in the Gulf region. EIG is associated
with Sheik Tariq bin Faisal Al Qassimi – a member of the ruling family of
UBS 3
Sharjah (one of the seven emirates in the UAE) and also Chairman of the
Economic Development Board in Sharjah.
EIG is presently a 50% JV partner in the A$854m Palazzo Versace, Dubai

and A$577m D1 projects. Becfar (an investment entity of UK’s Balli
Group and UAE-based investors Farbro Group and Arch Ltd) is a JV
partner in the A$941m First Jebel Ali Waterfront project and $171 Culture
Village projects. We anticipate the announcement of the JV partner for the
A$1,000m Second Jabel Ali Waterfront project in the future. (See section
entitled ‘International operations’ on page 28 for more detail.)
Sunland predominantly undertakes the role of construction manager within

JV’s with the second largest contractor in Dubai, Arabtec. Contracts are
cost-plus with margins at 8-10%. Therefore in periods of rising
construction costs it is important to 1) allow for rising costs (presently
running at 1%-1.5%/month); and 2) balance out a desire to lock away sales
risk, via pre-sales, with maintaining an ability to lift revenue to recover
rising costs where necessary.
Clearly the UAE is still an emerging market, with Sunland targeting c30- Sunland targets c30-50% margins on
50% margins on cost on these projects, as opposed to Australian cost on Dubai projects
developments which typically target margins of c15-20%.
(2) Financing – Funding for development projects in the UAE is considerably

different to Australia. In Australia, a developer will typically use equity to
buy the land, and then use that (along with pre-sales) as security for debt-
funding the construction costs. In the UAE, the land (similarly to Australia,
worth c20% of total development costs) is typically purchased on a staged
payment basis over two and a half years, with approximately five equal
payments. This requires far less upfront equity from the developer. The
early stage construction costs are funded from equity, until c10%
construction completion is reached. After that point the developer is able to
access a mixture of bank debt and buyer staged payments, which in the
UAE are handed over as quantity surveyors certify staged completion. This
imposes a much lower equity requirement than in Australia and as at June
2007, Sunland had an estimated c$50m (c10%) of its total equity in Dubai,
although we have allowed for a ramp-up in equity in our group estimates.
(3) Staffing resources – In Dubai, Sunland has to compete with other UAE- Staff in Duabi office continuously rising
based firms (both local and foreign) for human resources. To date, the – currently at c60 people
group has been able to staff up its new operations with people
predominantly from its Australian operations (who have themselves been
backfilled). However, with c57 staff now in the UAE head office (c100 in
Australia), future requirements will have to be met from new sources.
(4) Economic risks – The six nations that make up the Gulf Cooperation
Council (GCC), which include the UAE, have been experiencing very
strong economic growth in recent years. This has been underpinned by oil
and gas wealth accumulation (with crude oil rising to cUS$90/barrel, and
not having dipped below US$50/barrel in the past two years). In CY06
GDP growth was at 7.5% growth, well above the 3.5% average for 1990-
2002. With the UAE now focused on re-investing this wealth within the
UBS 4
region to ensure future economic growth is sustained, a development boom

ensued. This has resulted in high inflation (CY06: 9.5%, Global Insight).
Looking ahead, a slowdown would impact the residential market (hitting
demand and prices), and therefore affecting Sunland’s ability to execute
and replenish its pipeline.
(5) Residential supply – As we detail in our ‘Region Overview (UAE)’ section

(page 31), Dubai has experienced significant population growth (CY00-05
CAGR of 8.6% pa) which has underpinned strong demand in the residential
real estate market. However, there are numerous residential development
projects set to hit the Dubai market over the next few years, with real estate
commentators concerned about a potential future oversupply. This could
adversely affect Sunland given major projects hit the market over CY09-11.
However, potentially mitigating these risks are: 1) the large number of pre-
sales that Sunland continues to make in its projects; 2) the increasingly
sophisticated nature of the real estate market with foreigners now able to
acquire freehold property; and 3) continued strong economic growth in the
region, which will likely underpin continued population growth (largely
expatriates).
(6) Project timing – it is well documented that there is a shortage of well- We have allowed for some Dubai
qualified contractors (local or foreign) operating in the UAE – with major project delays in our estimates
groups such as Al Habtoor Leighton and Arabtec rapidly expanding their
work in hand (WIH). Coupled with strong development demand and tight
development schedules, project delays are not uncommon.
In our forecasts of Sunland’s Dubai developments, we have allowed some

time delays relative to management guidance as to when projects complete
and sell, as illustrated in the following table. On the demand side, pre-sales
in the two projects released to date have been good (69% of D1 and 75% of
Versace condos pre-sold). However, given strongly rising construction
costs, management is balancing the desire to lock away sales risk with the
ever-increasing cost of construction (due to input pricing and delays).
Table 1: Dubai developments
Project name SDG est. dev. completion date UBSe sales completion forecast
Palazzo Versace, Business Bay CY09 CY11
Culture Village CY09 CY12
D1 Dubai, Business Bay CY10 CY12
Dubai Waterfront 1 CY11 CY13
Dubai Waterfront 2 CY13 CY15

Source: UBS estimates
Don’t forget Australia: Domestic operations should not be overlooked as by Australia pipeline – 6,369 multi- lots
FY09 (on our numbers) these will still contribute 49% of earnings. Sunland spread across residential, multi-storey
presently has a strong pipeline of land subdivisions (5,408 lots), residential and land subdivision
housing (839 lots) and multi-storey (122 lots) projects yet to be completed or
subject to approval. Sunland has benefited from its low exposure to the soft
NSW residential market and has started to increase its exposure as the
residential market (ex Western Sydney) begins to recover.
UBS 5
Visibility of earnings: We are relatively conservative on our project

replenishment (unidentified) assumptions in that the major growth segment,
Dubai, has 100% identified revenue to FY11 and 90% in FY12 (the final year of
our forecast). Domestically, given the group’s 20-year plus record, we are
comfortable assuming some pipeline replenishment. The following table
provides a breakdown of percentage revenue in each division from identified
projects (including both under construction and subject to approval).
Table 2: Visibility of revenue
(A$m) Jun-08E Jun-09E Jun-10E Jun-11E Jun-12E
Multi-storey (Aust) Revenue 277 121 165 40 55
… % identified 100% 100% 85% 0% 0%
Land subdivision (Aust) 78 83 89 96 102
… % identified 100% 100% 100% 100% 100%
Residential (Aust) 102 109 115 122 130
… % identified 100% 100% 100% 100% 22%
Commercial & Ind (Aust) 10 45 25 30 35
… % identified 100% 100% 0% 0% 0%
International developments 33 92 147 205 150
… % identified 100% 100% 100% 100% 90%
Funds Management 13 13 14 14 15
… % identified 67% 66% 0% 0% 0%
Total Revenue (excl other/eliminations) 513 463 555 507 487
Management: Sunland is headed up by Managing Director Sahba Abedian (a

director since January 2001) in Australia; with founder Soheil Abedian (based in
Dubai) the Managing Director of Sunland Group International.
Our recent visit to Dubai confirmed our view that strong, mutually beneficial
relationships (particularly with joint venture partners founded or based in the
region) are a key factor to success. Sunland’s relationships have to date proven
worthwhile in providing access to opportunities in the UAE.
New geographic location: Management intends to decide in CY08 on its

next geographic location for expansion using the Versace hotel rollout as its
entry point. Possible locations are diverse and include North America, Russia,
the Middle East, North Africa and Asia. We see some competitive tension
between a desire to aim for a mature, Western economy versus the growth
offered by emerging regions, particularly the Middle East. In effect,
management has staked the company on the UAE (which we believe has been
the right move as it should stay in ‘boom’ mode for at least five years). The
decision as to where to next will be an important factor for investors.
EPS/DPS growth: Over FY08-13E, we forecast EPS and DPS CAGR of 11.6%
pa. Management targets longer-term double digit NPAT growth (as opposed to
EPS growth dependent on the timing of option exercise – See ‘Capital structure’
section on page 15). As illustrated in the following chart, relative to a mix of
UBS 6
real estate developers and asset managers (albeit risk profiles vary), Sunland
offers potentially strong future growth rates based on current estimates.
Chart 3: UBS FY 08-13E DPS growth pa Chart 4: UBS FY 08-13E EPS growth pa
12% 11.6%
12% 11.6%
10%
7.5% 10%
8% 6.2% 7.4%
8% 6.4% 6.4%
6% 4.5% 4.4% 4.0%
6% 4.7%
4% 2.6% 4.0%
4% 2.9%
2%
2%
0%
0%
S&P/ASX
Sunland
Stockland
Australand
Mirvac
Peet
MFT
LPT 300
S&P/ASX
Sunland
Stockland
Australand
Mirvac
Peet
MFT
LPT 300
Source: UBS estimates Source: UBS estimates
Pricing metrics: We estimate that Sunland is currently trading at an FY09E

P/E of 11.3x, relative to the broader market at 13.5x. Small caps are trading at
c14.5x and the LPTs are trading at 16.9x.
We note our FY08E NPAT of $95m is in line with management guidance

(recently reiterated at the AGM in November 2007).
With an estimated payout of 47% (Sunland is targeting 45-50%), Sunland offers

a FY09E DPS yield of 4.1% (broader market at 4.5x).
Our estimated FY08 DPS of 14cps is also in line with management guidance
(current FY08E DPS yield of 3.4%).
Chart 5: FY 08E DPS yield peer group comparison Chart 6: FY 08E EPS yield peer group comparison
12% 12%
10.3% 9.7%
10% 10%
7.2% 6.8% 6.7% 7.5% 7.3%
8% 6.5% 8% 6.8%
5.8% 5.4% 5.4% 6.1% 6.0% 5.9% 5.6%
5.1% 5.4%
6% 6% 4.7%
3.4%
4% 4%
2% 2%
0% 0%
S&P/ASX
S&P/ASX
Australand
Becton
Stockland
Sunland
Sunland
Australand
Becton
Stockland
Mirvac
Trinity
Mirvac
Trinity
Peet
Peet
MFT
Devine
MFT
Devine
LPT 300
LPT 300
Source: IRESS, UBS Research, consensus estimates (where no UBS coverage), Source: IRESS, UBS Research, consensus estimates (where no UBS coverage),
Company reports. Prices as at close 20 Dec 07. Company reports. Prices as at close 20 Dec 07.
UBS 7
Valuation: Our three-stage DCF derives a one-year price target of $4.95. We

use a beta of 1.19 with five- to ten-year and terminal EPS growth of 3.75% and
2.5%, respectively. Our DCF derived price target is calculated using Diluted
EPS given:
(1) the large number of options in place (31.5m or 9.8% of the register as at
June 2007; (see ‘Capital structure’ section on page 15 for more detail); and
(2) a low payout ratio (target 45-50%; UBS estimate 47%) to fund future
growth.
Our secondary SOTP approach also derives a valuation of $4.95 using a

weighted company EBITDA multiple of 12.9x. For shares on issue we have
used the average of shares on issue fully diluted and current shares on issue.
This is premised on the fact that the options have various expiries to FY15
(although the bulk of these are due by 20 July 2009).
With a forecast implied 12-month return of 26.2%, we initiate coverage of

Sunland with a Buy rating. Our detailed valuation analysis is provided on
page 10.
UBS 8
Financial forecasts
EPS and DPS profile
We forecast a five-year Cash EPS and DPS CAGR over FY08-13E of 11.6% pa. EPS CAGR over FY 08-13E of 11.6% pa
Operating free cash flow rises strongly in line with the Dubai pipeline as it
DPS CAGR over FY 08-13E of 11.6% pa
comes through over 2008-12. Underpinning our growth estimates are:
(1) Operations in Dubai – Earnings contribution from this region rising from
21% in FY08E to 51% by FY09E. We remain conservative in relation to
unidentified Dubai developments (causing a notable FY12E fall in NPAT
of c27%). We see upside if Sunland can continue to replenish its pipeline
with sizeable and financially attractive projects. EBIT/revenue margins
from Dubai operations are estimated at 85% in our model (90% margin
achieved in FY07) reflecting group overheads and zero tax treatment
imposed by the Dubai government (compared to the 30% withholding tax
applied to Australian corporate earnings); and
(2) Funds management – In FY07 Sunland successfully launched its first land
fund. Sunland is targeting H208 to launch a second fund. We presently
assume a January 2008 launch of a $39m land fund (i.e. of similar size to
Sunland’s first fund by gross assets, with similar fees structures assumed).
We have no further unidentified funds beyond this, providing some upside.
Table 3: Sunland UBS financial forecasts (A$m)
EBIT 2006 2007 2008E 2009E 2010E 2011E 2012E
…Urban Land $26 $28 $23 $25 $27 $29 $31
…Housing $5 $5 $12 $13 $14 $15 $16
…Multi-storey $106 $113 $62 $27 $37 $9 $12
…Hotel Invs & Ops $1 $1 $0 $1 $1 $1 $1
…Commercial & Industrial $0 $0 $2 $7 $4 $5 $5
…Funds Management $0 $2 $8 $7 $7 $7 $8
…International incl Proj Services $0 $7 $28 $78 $125 $174 $127
…Other / Eliminations ($15) $10 ($4) ($5) ($5) ($6) ($6)
EBIT (Core) $123 $166 $131 $153 $209 $233 $194
…Growth 124% 22% 8% 27% 41% 18% -22%
NPAT $72 $88 $95 $120 $169 $200 $157
…Growth 124% 22% 8% 27% 41% 18% -22%
EPS - Normalised cps 28.9 29.7 29.8 37.7 53.2 62.8 49.2
…Growth 105% 3% 0% 27% 41% 18% -22%
EPS - Normalised (Diluted) cps 25.6 26.9 28.0 35.3 49.3 58.1 45.7
…Growth 102% 5% 4% 26% 40% 18% -21%
DPS cps 12.0 12.6 14.0 17.7 25.0 29.5 23.1
…Growth 15% 5% 11% 27% 41% 18% -22%
UBS 9
Valuation and recommendation

Three-stage DCF valuation on earnings of $4.95
We have valued Sunland on a three-stage DCF of diluted earnings basis and UBS three-stage DCF on earnings:
have derived a fair value of $4.68. Our price target is $4.95.
Fair value = $4.68
Our DCF derived price target is calculated using Diluted EPS given –
Price target = $4.95
(1) the large number of Sunland options (31.5m or 9.8% of register as at June
2007; (see ‘Capital structure’ section on page 15 for more detail); and
(2) Sunland’s low payout ratio (target 45-50%; we assume 47%) to fund
growth.
We have applied a five- to ten-year growth rate of 3.75% and terminal growth
rate of 2.5%. Our ‘forward looking’ beta is 1.19. This has been derived in a
factored manner, taking 51% of 1.33 (to reflect estimated FY09 earnings coming
from Dubai) and 49% of 1.05 (for domestic operations). In terms of sensitivity,
if we reduce our beta to 1.10, the price target rises to $5.20 (+5%).
We initiate coverage with a Buy rating. At $4.25, Sunland shows a c7.5%

FY08E EPS yield and a c3.4% FY08E DPS yield. While the DPS yield is low
(relative to broader equities at 4.1%), Sunland’s five-year CAGR from FY08-
13E is 11.6%.
Table 4: Valuation metrics
Rating Buy Price 4.25cps
Price target $4.95 Valuation $4.68
Upside to price target 16% Upside to valuation 10%
FY 08E cum-adj DPS yield 3.4% 1 FY 08E EPS yield 7.5%
Valuation metrics
- Beta 1.19 - Terminal growth 2.5%
- 5-10 year growth rate 3.75% - 10yr Discount rate 11.8%
Source: UBS estimates. Priced as at 20 December 2007. Note: (1) as at 18 Dec 2007
DCF sensitivities
Table 5: UBS fair value sensitivity
Change in discount rate
Change 2.0% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0%
in 5-10yr -3.0% 4.60 4.62 4.64 4.65 4.67 4.69 4.70 4.72 4.74
DPS -2.0% 4.61 4.62 4.64 4.66 4.68 4.69 4.71 4.73 4.75
growth 0.0% 4.62 4.63 4.65 4.67 4.68 4.70 4.72 4.74 4.76
Rate 2.0% 4.63 4.65 4.66 4.68 4.70 4.71 4.73 4.75 4.77
(%) 3.0% 4.63 4.65 4.67 4.68 4.70 4.72 4.74 4.75 4.77
UBS 10
SOTP valuation (EBITDA multiples) $4.95

Our secondary SOTP approach also derives a valuation of $4.95 using a
weighted company EBITDA multiple of 12.9x. For shares on issue we have
used the average of shares on issue fully diluted and current shares on issue.
Chart 7: UBSE FY09 SOTP valuation

EBITDA Valuation: Low FY09e Mid FY09e High FY09e
Earnings (Norm.) Split EBITDA EBITDA Value EBITDA Value EBITDA Value
(%) $m Multiple $m Multiple $m Multiple $m
…Urban Land 16% $25.0 7.5x $188 8.4x $211 9.4x $235
…Housing 9% $13.0 8.0x $104 9.0x $117 10.0x $130
…Multi-storey 18% $27.2 10.0x $272 11.3x $306 12.5x $340
…Hotel Operations 0% $0.5 10.0x $5 11.3x $6 12.5x $6
…Commercial & Industrial 4% $6.8 6.0x $41 6.8x $46 7.5x $51
…Funds Mgmt 4% $6.5 8.5x $55 9.6x $62 10.6x $69
…International incl Proj Services 51% $78.3 13.3x $1,045 15.0x $1,176 16.7x $1,306
…Other / Eliminations -3% -$4.8 10.9x -$52 12.2x -$59 13.6x -$66
Totals/Weighted Average 100% $152.6 10.9x $1,658 13.0x $1,865 12.2x $2,072
…Less Interest bearing net debt -$215 -$215 -$215
Sum of the parts valuation $1,443 $1,650 $1,857
Shares on Issue:
Shares on Issue (fully diluted) 350.1 350.1 350.1
Sum of the Parts per Share (cps - fully diluted) $4.12 $4.71 $5.30
Valuation Implied PE 10.9x 12.5x 14.1x

Valuation Implied EPS Yield 9.2% 8.0% 7.1%
Valuation Implied DPS Yield 4.3% 3.8% 3.3%
Sum of the Parts per Share (cps) - pre-dilution Low FY09e Mid FY09e High FY09e
EBITDA Value EBITDA Value EBITDA Value
Multiple $m Multiple $m Multiple $m
Shares on Issue (excluding options) 318.6 318.6 318.6
Sum of the Parts per Share (cps) $4.53 $5.18 $5.83
SOTP Valuation (Midpoint) $4.32 $4.95 $5.57
The table below provides an explanation on the multiples used in our valuation.
Table 6: UBS multiples
Division Multiple UBS comment
Urban Land 8.4x Small player in diverse market with long-term landbank
Housing 9.0x Niche player in high-end project home market
Multi-storey 11.3x Differentiated branding through Q1 and other projects
Hotel operations 11.3x Exclusive Versace JV offers effective market entry strategy
Commercial and industrial 6.8x New domestic division, yet to be proven
Funds management 9.6x 1st development fund successful with 2nd launch imminent
International incl proj services 15.0x EBITDA growth of 35% pa over next five years
UBS 11
Group overview
History
One of Australia’s fastest organically growing developers: Sunland
Group Limited commenced in 1983 as a ‘house and land’ developer on the Gold
Coast under founder Soheil Abedian (current executive director and Managing
Director of Dubai operations). It differentiated from much of its competition
through its focus on modern architectural design and implementation.
Sunland listed on the ASX in 1995, with an issue share price of 10¢ (adjusted
for a share split in FY00) and market capitalisation of $16.25m. In April 2005
Sunland entered the S&P/ASX 200. Today, Sunland has a market capitalisation
of $1.46bn (free float c70%), with operations spread across Australia and Dubai.
Sunland’s current share price is $4.25 (up 17.3% YTD), with its DPS five-year
CAGR (FY03-07E) a significant 35% pa. (We note that EPS on this basis is
difficult to calculate given accounting standard changes to AIFRS during FY05,
given particular impacts to timing of profit realisation from developments.)
Divisions
Increasingly mixed business streams: From pure ‘house and land’ Chart 8: FY07 EBIT split by division
developer when first established, Sunland now enjoys diversification across both
a range of business streams and geographically in both Australia and Dubai. Hotel
1% Proj. Serv.
Funds
4%
Mgmt
In the past two years Sunland has refocused on its core business talents. Notably, 2%
Multi-
in May 2007 Sunland completed the sale of its businesses Sunleisure (apartment Storey Land
72% Subdiv.
and leisure management business) and Sunkids (child care ownership and 18%
operation). We note that sale of these businesses was profitable for Sunland. Housing
3%
Sunland has re-focused on up-market and luxury developments primarily in
multi-storey and residential developments. Its growing land subdivision business Source: Sunland, UBS estimates.
has been overlaid with a (still small) funds management business, in order to
increase annuity-style income and smooth earnings given the timing of large
development completions.
Its hotel operations (having commenced with the successful development of the
Palazzo Versace, Gold Coast hotel and condominiums in 2000) are set to be
expanded, leveraging its exclusive global roll-out agreement for a further 15
Palazzo Versace resorts executed with the House of Versace in FY07. Presently,
a second Palazzo Versace resort is being developed in Dubai.
Australia: Sunland’s Australian business streams presently comprise:
Q Development operations: include multi-storey (apartments), residential

housing and land subdivision.
Operations in these divisions were originally based in Queensland with a

move into the Victorian market in January 2000, through current joint
managing director Sahba Abedian. A further move into the NSW market was
made in August 2003 with the Birchgrove development.
UBS 12
While presently operating in the NSW market, Sunland is yet to announce a

marquee ‘Sunland’ branded multi-storey project in the state (similar to those
such as Q1 in Queensland and Yve in Victoria).
Q Project services: including design, project and construction management.
Q Funds management: with the launch of its first land syndicate ($39m
Sunland Diversified Land Fund in Australia, raising $20m of equity) in
August 2006. Management has flagged the launch of a second fund in FY08
(in our forecasts).
Q Hotel ownership: the Palazzo Versace Hotel, Gold Coast Queensland.
In November 2006, Sunland announced that it had executed a Global Rollout

Agreement with the House of Versace SpA for the exclusive licensing
agreement to develop 15 hotels/resorts under the luxury brand of Palazzo
Versace.
Chart 9: Sunland’s targeted FY10E

Dubai, UAE: Sunland’s Dubai business streams presently comprise:
EBIT split by geography
Q Development operations: including five projects:
(1) 80-storey residential tower known as ‘D1’ in a joint venture with EIG.
Completion due 2010; Dubai Aust.
50% 50%
(2) Development of the second Palazzo Versace in Dubai (in JV with EIG)
comprising 213 suites and 169 luxury villas. Completion due in late 2009;
(3) First Jebel Ali Waterfront project (in JV with the Becfar Group) comprising
9,708sqm retail space, 8,965sqm commercial space and 742 apartments
Source: Sunland; UBS estimates.
split between serviced and residential lots. Completion due 2010;
(4) Second Jebel Ali Waterfront project (adjacent to the first Jebel Ali
Waterfront project; 100% owned but likely to be developed in JV with a
partner company) comprising 5,000sqm retail space comprising 1,170
apartments. Completion due 2013; and
(5) 26-storey mixed use residential tower in Culture Village (JV with the
Becfar Group) comprising 191 apartments. Completion due 2010.
Q Project management: Sunland is project manager in each of the five projects

noted above. Further, Emirates Sunland Group (a 50/50 JV Emirates
International Holdings (EIG) and Sunland) is project managing the White
Bay, Umm Al Quwain which is c50km from Dubai city.
Q Funds management: Sunland may look to expand its funds management

business to Dubai in the medium term (not in our forecasts).
The geographic earnings mix: While earnings are still heavily skewed to
Australia (97% in FY07), we anticipate a more balanced earnings split by region
by 2010 of 50% Dubai/50% Australia by 2010 (UBS estimate) as Dubai
developments complete.
UBS 13
Organisational structure
Figure 1: Sunland Group Limited – organisation chart
BOARD OF DIRECTORS
MANAGING DIRECTOR
Sahba Abedian
AUSTRALIA DUBAI
CHIEF OPERATING CHIEF OPERATING

OFFICER OFFICE
Mark Jewell David Brown
DESIGN /
STATE GENERAL MGRS FINANCE AND
GENERAL MANAGER FINANCIAL CONSTRUCTION
David McMahon – QLD ACCOUNTING DESIGN AND
CORPORATE SERVICES CONTROLLER PROJECT MGMT
Kate Braybrook – NSW Grant Harrison DELIVERY
Anne Jamieson Monica Murray SERVICES
John Meyers - VIC Chief Financial Officer
SUNLAND FINANCE AND ARCHITECTURAL PROJECT MGMT & CONSTRUCTION

SUNLAND DESIGN SUNLAND HOMES URBAN DEVELOPMENT SALES OFFICE MANAGEMENT
CONSTRUCTIONS ACCOUNTING SERVICES DEVELOPMENT MANAGER
PROJECT
DIRECTOR
Source: Sunland
Note: Sunland Board of Directors include: Terry Jackman (Chairman); Soheil Abedian & Sahba Abedian (Executive Directors); John Leaver, James Packer & Ron Eames (Non
Executive Directors).
Senior management overview

Sahba Abedian – Managing Director (Australian based): Mr Sabha
Abedian is a qualified lawyer (admitted into the Supreme Court of Queensland),
joining Sunland Group Limited in April 1998 as legal counsel/company secretary.
In January 2000, Mr Abedian established Sunland’s Victorian operations.
Soheil Abedian – Executive Director (Managing Director of Sunland

Group International, Dubai based): Mr Soheil Abedian co-founded Sunland
Homes Pty Limited in 1983 to develop luxury housing projects. He has over 20
years of experience in architectural design, construction and project
management in a wide range of developments. Mr Abedian is an honorary
Professor at Griffith University (Business School – Gold Coast).
Grant Harrison – CFO and Company Secretary: Mr Harrison joined

Sunland during 2000, following 16 years of experience in banking with Westpac,
specialising in commercial, property and corporate finance transactions. Mr
Harrison was appointed Chief Financial Officer in December 2004. He is also
the Director of Sunland Funds Management Business.
Mr David Brown – Chief Operating Officer (Middle East): Former

National Design Director for Sunland who relocated to the Middle East office in
2006 and is now COO of Dubai Operations.
Mr Mark Jewell – Chief Operating Officer (Australia): Former Executive

Director of Sunland from 1997 to 2002 before leaving to pursue a career in
property consultation to various development companies. Mr Jewell has returned
to be COO of Australian Operations.
UBS 14
Capital structure
Sunland has 321m of shares on issue, with a further 31.5m (9.8% of register) in
options with an average excise price of $2.32 (current price $4.25). The largest
holders of the 31.5m options include James Packer’s Cavalane Venture P/L
(79% at a $2.50 strike price) and managing directors Sahba Abedian and Soheil
Abedian (3%, at a $1.68 strike price).
Given option exercise prices, clearly Sunland’s EPS will be diluted as options
are exercised. Below we include the equivalent diluted EPS if all options are
exercised in FY08 (and assuming 4.5% interest received on option cash
received).
Table 7: Diluted EPS (UBS estimate)
(A$m) FY08E FY09E FY10E FY11E FY12E
NPAT pre options 95 133 174 205 155
NPAT post options 98 136 177 209 158
Diluted share capital 350 350 350 350 350
EPS diluted 28.0 38.9 50.6 59.6 45.1
EPS pre dilution 29.7 41.7 54.6 64.5 48.5
Difference -5.8% -6.7% -7.3% -7.5% -7.1%
In terms of major shareholders, the founding Abedian family owns c17.7% of

the register combined (excluding options), while interests of Cavalane Venture
P/L and Continental Capital P/L (companies affiliated with non-executive
directors) are 12.9% and 11.1% respectively.
Table 8: Major holders of Sunland
Name of Holding Company affiliation Position % held
Havannah Pty Limited /
Pacific Dev. Corp. Pty Ltd /
Sahba Abedian Abedian Family Executive Directors 17.70%
Cavalane Ventures Pty Ltd James Packer Non-executive Director 12.90%
Continental Venture Capital John Leaver Non-executive Director 11.12%
Source: Sunland, 2007 International Roadshow Presentation; UBS estimates. Excludes options.
Capital management
Sunland has a relatively conservative balance sheet with very low gearing (debt
to assets of 12.6%; or net debt/assets of nil). Further, in light of the current credit
market environment, Sunland is well placed with total bank loan facilities not
utilised as at June 2007 of $232.5m (or 237% of current debt). Interest coverage
is 2.1x.
Sunland’s NTA as at June 2007 is $2.49, excluding deferred tax assets and
liabilities. Sunland currently trades at a large premium to NTA given the value
of its pipeline and value attributed to its corporate businesses.
UBS 15
Funding for development projects in the UAE is considerably different to

Australia. In Australia, a developer will typically use equity to buy the land, and
then use that (along with pre-sales) as security for debt-funding the construction
costs.
In the UAE, the land (similarly to Australia, worth c20% of total development Our forecasts show gearing going to
costs) is typically purchased on a staged payment basis over two and a half years 31% by FY10 (which is in line or below
with approximately five equal payments. This requires far less upfront equity most Australian developer peers)
from the developer. The early stage construction costs are funded from equity,
until c10% construction completion is reached. After that point the developer is
able to access a mixture of bank debt and buyer staged payments, which in the
UAE are handed over as quantity surveyors certify staged completion. This
imposes a much lower equity requirement than in Australia and as at June 2007,
Sunland had an estimated c$50m (c10%) of its total equity in Dubai, although
we have allowed for a ramp-up in equity in our group estimates. Our forecasts
show gearing going to 31% by FY10 (which is in line or below most Australian
developer peers). Debt costs in the UAE are 4.25% (UAE Central Bank CD rate,
in line with the US Federal Reserve rate given the US$/AED peg). Margins on
developments vary widely depending on development specifics.
Stock performance
A consistent outperformer: Sunland has been a consistent outperformer
since listing in 1995, providing a 34.9% cumulative annual compound return
over the past 10 years, outperforming the S&P/ASX 200 Accumulative index
+20% pa.
Despite a residential market slowdown in Australia over the past year, over the Sunland has provided a 34.9%
year to 31 November 2007 Sunland provided a cumulative 30.8%. We would cumulative annual compound return
attribute the substantial outperformance largely to its investment in a new over the past 10 years
geography in the Middle East and the potential future roll-out of the Versace
Hotel brand. Over this period, Sunland outperformed the S&P/ASX 200
Accumulative Index by 7.1% and the UBS RE Managers and Developers Index
by 11.2%.
Chart 10: Sunland relative performance (accumulative return)
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
-10.0%
One month Three mths Six Mths One year Three years Five years
SDG UBS REM&D 300 S&P/ASX LPT 300 S&P/ASX 300
Source: UBS estimates, 31 November 2007. Note: UBS REM&D comprises LLC, ALZ, FKP, SDG and BEC (mkt cap
weighted). Three- and five-year returns are Annual Compound Returns.
UBS 16
Recent results and growth

FY07 – a period of consolidation: Operating NPAT in FY07 was $88.1m
(versus guidance of $85m), a rise of 22% y/y.
EPS was 29.7¢ps (+2.8% on pcp), while DPS was in line with guidance at
13.5¢ps (+8.0% on pcp). The payout ratio for FY07 was 45% (versus 43% pcp).
FY07 was a period of consolidation for core earning streams to focus on the
offshore opportunity as well as taking advantage of strong markets in Australia.
This included:
Q The establishment of a funds management division with the August 2006
launch of the Sunland Diversified Land Fund (equity $19.9m);
Q Further diversification into the non-residential development sector with the
pre-sale of the new Virgin Blue Headquarters in Bowen Hills, Brisbane for
$61m (12,400sqm NLA due for completion by August 2008); and
Q Increased contribution from non-development income through project
services.
Further, the sale of Sunkids and Sunleisure in May 2007 (c$21m profit over
book) pointed to Sunland’s continual commitment to focus on its core
operations.
FY08 – guidance of +8% earnings growth: Management has provided Management targeting $95m NPAT
guidance of +8% earnings growth in FY08 to $95m NPAT (29.8¢ps pre- in FY08
dilution) – this was recently reaffirmed at the last AGM on 28 November 2007.
This growth is premised on an increased project management and services
income from Dubai projects, fees arising from the current A$39m Sunland
Diversified Land Fund and the launch of new wholesale fund during FY08. In
the longer term, management has a stated goal of double digit NPAT growth
(EPS growth dependant on the timing of options exercise).
DPS has grown at 35% pa five-year (FY03-FY07) CAGR: Management is DPS payout ratio target of 45-50%
committed to continued growth in DPS (no future growth guidance provided),
with a DPS payout ratio of 45-50%. We estimate a five-year DPS FY08-13E
CAGR of 10.6%.
Chart 11: Historical DPS growth and FY08E (cps)
14
7.00
6.75
12 35% 5-year CAGR (FY03-

6.25
FY07a)
10
5.00
8
7.00
6
6.75
6.25
6.00
5.00
4
3.00
0
2003 2004 2005 2006 2007 2008e
INTERIM FINAL
Source: Sunland, UBS estimates
UBS 17
Table 9: FY07 results summary
(A$m) FY06 FY07 % ch y/y

Multi-storey EBIT 103.3 113.3 9.6%
Land subdivision EBIT 25.6 27.9 9.1%
Project services EBIT 2.5 6.6 260.5%
Residential housing EBIT 4.9 4.8 -1.0%
Funds management EBIT 0.0 2.5 100.0%
Hotel investments and operations EBIT 1.4 1.3 -12.4%
Other 0.9 0.2 -83.4%
Total EBIT 138.6 156.4 12.8%
Finance costs -32.4 -46.3 42.9%
Gain/(loss) on sale of PPE 4.1 -0.1 -103.4%
Profit on sale of associate 0.0 9.0 100.0%
Profit on sale of subsidiary 7.0 22.6 321.9%
Share of net profit from associate 0.0 0.6 100.0%
Unallocated corporate expenses -14.0 -18.0 28.5%
Profit before tax 103.3 124.1 20.1%
Tax -31.0 -36.0 16.2%
NPAT 72.3 88.1 +21.8%
EPS (cps) 28.9 29.7 +2.6%
DPS (cps) 12.5 13.5 +8.0%
Source: Sunland, UBS estimates
Chart 12: FY07 EBIT split by division Chart 13: FY07 EBIT/revenue margin split by division
Hotel
70% 65%
Project
1% Services 60%
4% 50%
37%
Funds Mgmt 40% 31%
26% 25%
2% 30%
Multi-Storey 20% 8%
Land 7%
72% Subdivision 10%
18% 0%
Total SDG group
Hotel Inv. & Op's.
Housing
Resid. Housing
Funds Mgmt
Multi-Storey
Urban Land Dev.
Project Services
3%
Source: Sunland; UBS estimates Source: Sunland; UBS estimates
UBS 18
Australian operations
Multi-storey/Apartments (46% of FY08E EBIT)
Key differentiator is the ‘Sunland’ brand: Sunland’s apartment division is
active in Australia (south-east Queensland, Melbourne and Sydney), as well as
Dubai.
The group has a distinctive brand with marquee projects such as the 80-storey
Q1 tower (Australia’s tallest residential tower) and Circle on Cavill, both on the
Gold Coast, and Yve in Melbourne. Sunland is also presently developing the 80-
storey D1 apartment tower in Dubai (a sister project to Q1).
Sunland is currently seeking to locate a site for the development of a marquee

product in Sydney (current pipeline only comprises a few small Sydney projects).
Current development projects: There are currently only two apartment

projects being developed in Australia; namely, Balencea, Victoria (85 lots), and
36 Louisa Road, Birchgrove, NSW (6 lots). These should complete by 2009 and
2008, respectively. There are a further two projects subject to approval,
including Marine Parade, Labrador, Queensland (19 lots), and Prince St,
Cronulla, NSW (12 lots).
Table 10: Australian multi-storey projects (completed and under construction)
% of total Unsettled lots Total project

Project name Total project lots Unsettled lots UBS comment
lots unsettled (A$m) end value (A$m)
Projects completed
Q1 Completed in Sept
525 6 1% $9.8 $408.2
Surfers Paradise, Qld 2007
Circle on Cavill
644 144 22% $116.9 $455.1
Surfers Paradise, Qld
Avalon UBSe 95% sold by

170 62 36% $36.5 $104.1
Surfers Paradise, Qld FY08 end
Yve
210 1 0% $1.9 $176.4
St Kilda Rd, Vic
95 Cammeray Road UBSe both lots sold

2 0 0% $0.0 $9.0
Cammeray, NSW in FY08
Total 1,551 213 $165.1 $1,152.8
Projects under construction /

subject to approval
Balencea Completion due

85 85 n.a $106.0 $106.0
St Kilda Rd, Vic ¹ CY09
36 Louisa Road Completion due

6 6 n.a $45.6 $45.6
Birchgrove, NSW ¹ CY08
Marine Parade Completion due

19 19 n.a $40.8 $40.8
Labrador, Qld ² CY10
Prince Street Completion due

12 12 n.a $41.3 $41.3
Cronulla, NSW ² CY10
Total 122 122 $233.7 $233.7
Source: Sunland, UBS estimates. Notes: (1) Under construction; (2) Subject to approval
UBS 19
UBS estimates: We model each project separately using an average selling

price (not escalated in future years) and unidentified pipeline to replenish projects
completing in future years. We see our unidentified development pipeline as
relatively conservative, with potential upside if large projects are secured.
Table 11: UBS estimates – multi-storey, Australia
Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12
Project revenue
...Circle on Cavill, Gold Coast, Qld 93 51 8 - -
...Avalon, Gold Coast, Qld 97 9 - - -
...Q1, Gold Coast, Qld 33 5 - - -
...Yve, Melbourne, Vic 4 - - - -
…Cammeray, NSW 9 -
...Ballencea, Melbourne, Vic - 56 50 - -
…Birchgrove, NSW 42 - -
…Marine Parade, Qld - - 41 - -
…Cronulla, NSW - - 41 - -
...Unidentified projects - 15 25 40 55
Total revenue 430 277 136 165 40 55
% of group revenue 68% 53% 27% 29% 8% 11%
EBIT 113 61 30.0 36 9 12
% of group EBIT 68% 47% 18% 17% 4% 6%
EBIT/revenue margin 26% 22% 22% 22% 22% 22%
Land subdivision (17% of FY08E EBIT)

Over 5,000 lots controlled: Sunland currently has a pipeline of 5,005 lots
across Queensland, Victoria and NSW. Of these, 2,004 lots (35%) are owned by
the Sunland Diversified Land Fund.
Similar to other developers (Stockland, Delfin Lend Lease, etc), Sunland seeks
to structure its acquisitions to manage capital efficiency, which may include:
Q Acquisition of land on deferred terms;
Q Acquisitions that are subject to re-zoning; and
Q Buying long options on land that is likely to be re-zoned for residential use.
UBS 20
Chart 14: Development lots controlled
90,000 84,945
75,000
57,000
60,000
45,000
33,800
29,016
30,000
14,809 13,653 12,000
15,000 10,241 8,591 8,526
5,005
0
BLP
FKP
Mirvac
Delfin LL
AVJ
Stockland
Peet
MXG
SDG
Investa
ALZ
Source: Various company sources, UBS estimates.
Management is looking to grow this division with more acquisitions in the near
term to provide further products for new funds. Its first fund, Sunland
Diversified Land Fund, is presently tracking ahead of PDS forecasts, as detailed
in the ‘Funds management’ section of this report.
Table 12: Land subdivision
Value of
% of total unsettled lots Total project
Project name Total project lots Unsettled lots lots unsettled (A$m) end value (A$m) UBS comment
Clover Hill, Sold into SDLF; completion

138 7 5% $1.7 $34.4
Mudgeeraba, Qld due Dec 2008
Allure
33 9 27% $4.4 $11.5
Coolum, Qld
Lilyvale
42 0 0% $0.0 $5.3
Caboolture, Qld
TOTAL 213 16 $6.1 $51.2
Projects under const. / subject to approval
Bushland Beach Sold into SDLF; completion

1833 1375 75% $213.6 $268.6
Townsville, Qld due Dec 2008
Highfields
106 90 85% $12.5 $14.8
Toowoomba, Qld
Bluestone Green
1049 962 92% $96.7 $105.5
Werribee, Vic
The Province
273 273 100% $56.6 $56.6
Highton, Vic
Chancellor
399 399 100% $122.7 $122.7
Bundoora, Vic
Palms Estate
119 78 66% $17.8 $27.3
Forster, NSW
Peregian, 50% JV with Bundaberg

1400 1400 100% $548.7 $548.7
Sunshine Coast, Qld Sugar; 10-15 year project
Tahmoor
229 229 100% $85.4 $85.4
Tahmoor, NSW1
TOTAL 5408 4806 $1,154 $1,229.6
Source: Sunland, UBS estimates. All 100% owned except for Peregian, a 50/50 JV with original owner Bundaberg Sugar
UBS 21
UBS estimates: Based on current projects, we have estimated that the average
selling price of lots sold in FY08 is $162,000. Our modelled average price
growth for land sold is 3.0% pa over the next five years, with the average lots
sold at 5.5% average growth pa.
There exists upside to our revenue estimates in this division coming from: (1)
super lot sales into land funds (with Sunland looking to establish future land
funds following positive track record of Sunland Diversified Land Fund, not in
our forecasts); and (2) the Peregian Springs (1,400 lots), which has seen strong
demand, having 19 sales/month, and will underpin lot sales for 10-15 years in
this division once it commences (likely post CY11).
Table 13: UBS estimates – land subdivision
Revenue 76 78 83 89 96 102
% of group revenue 12% 15% 17% 16% 18% 20%
EBIT 27.9 23.3 25.0 26.8 28.7 30.6
% of group EBIT 17% 17% 15% 13% 12% 17%
Residential housing (9% of FY08E EBIT)

Sunland originally commenced operations in 1983 developing luxury homes in
Queensland. At present, this division comprises only 6% of FY08E EBIT with
projects spread across Queensland, NSW and Victoria.
With c170 staff spread across these states, Sunland has all the in-house
capabilities to execute projects from design to completion. Given the lower
margins that residential housing provides (7% in FY07, impacted by a
slowdown in the Australian residential market, particularly investor demand),
we do not expect an increased investment in this division. With continued
measured growth in higher-margin businesses, including land subdivision and
funds management, we anticipate management will continue to concentrate on
growth in these businesses.
UBS 22
Table 14: Residential housing
% of total lots Value of Total project

Project name Lots Unsettled lots unsettled unsettled lots (A$m) end value (A$m) Completion due
Jefferson
64 12 19% $4.3 $22.2
Coomera, Qld
Greenwood Pocket
49 0 0% $0.0 $18.4
Fitzgibbon, Qld
Northbridge Residences
22 0 0% $0.0 $8.9
Varsity Lakes, Qld
Jardin Residences
62 0 0% $0.0 $25.7
Sanctuary Lakes, Vic
Casa
19 0 0% $0.0 $7.5
Acacia Gardens, NSW
TOTAL 216 12 $4.3 $82.7
Projects under construction / subject to approval
Greenvue
44 44 100% $15.7 $15.7 CY08
Pacific Pines, Qld
Arbour Residences
179 179 100% $53.8 $53.8 CY08
Burnside, Vic
The Collection
8 6 75% $15.1 $19.2 CY08
Prince Henry, NSW
Castel
51 34 67% $22.9 $33.8 CY08
Castle Hill, NSW
Emery
79 79 100% $44.5 $44.5 CY08
Narwee, NSW
Elysia
58 58 100% $24.9 $24.9 CY08
Penrith, NSW
The Parc
187 187 100% $85.5 $85.5 CY09
Tugun, Qld
Banksia Lakes
123 123 100% $120.7 $120.7 CY09
Sanctuary Cove, Qld
Thomas Street
35 35 100% $25.9 $25.9 CY09
Picnic Point, NSW¹
Bourton Road
74 74 100% $28.9 $28.9 CY10
Merrimac, Qld¹
TOTAL 838 819 $437.9 $452.9
Source: Sunland, UBS estimates. Note: (1) Subject to approval
Table 15: UBS estimates – residential housing
Revenue 73 101 107 114 121 128
% of group revenue 12% 20% 23% 21% 29% 29%
EBIT 4.8 11.8 12.5 13.2 14.0 14.9
% of group EBIT 3% 9% 8% 5% 12% 13%
UBS 23
Commercial/Industrial development (1% of

FY08E EBIT)
In leveraging its significant development experience, Sunland has recently
expanded its business to include development of commercial and industrial
assets. Current projects include:
Q The purpose-built Virgin Blue Limited (pre-sold to Virgin) airline

headquarters at Bowen Hills, in Brisbane’s inner north ($61.1m end value).
This 12,400 sq m development is due for completion in March 2008 and
represents Sunland’s first stand-alone commercial project (Sunland has
previously developed mixed-use projects such as Aria in Broadbeach and
Circle on Cavill).
Q A smaller industrial project in Everett St, Townsville, Queensland (53 lots,

$18.4m end value). This is currently being marketed for pre-sale with
development expected to complete in 2008. Future projects flagged include a
new industrial development in Townsville’s city region and a commercial
and shopping centre complex in Bushland Beach, north of Townsville.
We do not see Sunland having any competitive advantage over more established
developers in this sector. Therefore, we anticipate that Sunland will continue to
take a measured approach to growth in this division, with pre-sales, such as the
Virgin Blue headquarters, a feature. While markets (domestic supply and demand)
remain healthy, Sunland should achieve reasonable performance in this space.
Table 16: UBS estimates – commercial/industrial development
Project end Unsettled value

Project name Lots value (A$m) (A$m) UBS comment
Virgin HQ, Bowen Hills, Qld 1 $61.1 $61.1 Completion expected March 2008
Everett Townsville, Qld 53 $18.4 $18.4 Completion expected 2008
Total 54 $79.5 $79.5
Source: Sunland, UBS estimates.
UBS estimates: Aside from modelling these two projects, we have included
some unidentified revenue in FY10 ($25m), FY11 ($50m) and FY12 ($50m),
given Sunland’s intention to continue to grow this division. We shall revise our
assumptions (and potentially bring forward our unidentified revenue), as
projects are announced.
Table 17: UBS estimates – commercial/industrial development
Revenue 0 10 45 25 30 35
% of group revenue 0% 2% 9% 4% 6% 7%
EBIT 0.0 1.5 6.8 3.8 4.5 5.3
% of group EBIT 0% 1% 4% 2% 2% 3%
EBIT/revenue margin n.a 15% 15% 15% 15% 15%
UBS 24
Funds management (6% of FY08E EBIT)

First fund successfully launched in September 2006: In September First land fund launched…
2006 Sunland, through its wholly-owned subsidiary, Sunland Funds
Management (SFM), announced the successful launch of its first land fund – a …second fund getting very close
$39m Sunland Diversified Land Fund (the ‘Fund’). Details of the Fund are as
follows:
Q The initial portfolio of the Fund comprises three residential land subdivision
holdings – Bushland Beach, Townsville (Queensland), Arbour on the Park,
Burnside (Victoria) and Clover Hill, Mudgeeraba on the Gold Coast
(Queensland).
Q The fund aims to generate returns from the development and sale of lots in
the project, with a forecast IRR of 20% over the term of the project, forecast
to complete in March 2009.
Q A total $19.9m of equity was raised, with the National Australia Bank providing
debt funding (may be drawn to a maximum amount of 60% of the LVR).
Q Sunland made a 15% cornerstone investment.
Q The fees derived from Sunland include:
(1) RE fees comprising: (i) establishment fee of 5.1% of the purchase price,
(ii) management fee of 1.794% of the gross sale price received by the
Fund, and (iii) a performance fee if the fund achieves returns in excess
of the 20% IRR target;
(2) Development management fees at 3.5% of all infrastructure works; and
(3) Sales and marketing management fees at 3% of the gross sale price.
The fund is presently performing well above PDS targets. As at June 2007, the
fund achieved 380 sales totaling $55.7m, with 68.1% of the total number of
available lots sold. Investors in this fund have received a capital distribution of
40cps (c2x forecast dividend of 21c).
Second fund expected in 2H FY08: Sunland is currently finalising plans for

a second fund (this time a wholesale fund), which is scheduled for release in
2H FY08. We presently assume a January 2008 launch of a $39m land fund (ie,
of similar size to Sunland’s first fund, with similar fee structures assumed). We
see upside to our forecasts if a larger fund is launched (in our view, it could be
c2x the size of the first fund).
Table 18: UBS estimates – funds management
Revenue 4 13 13 14 14 15
% of group revenue 1% 2% 3% 2% 3% 3%
EBIT 2.5 7.7 6.5 6.8 7.2 7.5
% of group EBIT 1% 6% 4% 3% 3% 4%
EBIT/Revenue Margin 65% 60% 50% 50% 50% 50%
UBS 25
Hotel investments and operations (1% of FY08E

EBIT)
Sunland’s hotel operations are based on Palazzo Versace hotels where it
presently owns a 51% share of the Versace Hotel Gold Coast, is developing a
second Versace resort in Dubai, and has an exclusive agreement with the House
of Versace to roll out 15 of these resorts globally.
The concept is based on Sunland developing both a branded Versace hotel and
branded villas on each site. The villas are then each sold for a profit which
covers Sunland’s cost of developing the hotel (ie, leaving Sunland with a hotel
at no cost). For the House of Versace, these resorts are fitted out with authentic
Versace goods, meaning they sell a large bulk of goods in each resort (estimated
at $50m for the Gold Coast resort). This provides Versace with an additional
(and very profitable) selling outlet for its product. Other luxury branded resorts,
such as Armani and Louis Vuitton, have since followed this model.
Palazzo Versace exclusive agreement: Sunland has an exclusive

agreement with the House of Versace (Versace) to develop Palazzo Versace
resorts around the world, following the success of the first Versace resort
developed on the Gold Coast and completed in September 2000.
Sunland intends to utilise its exclusive rights to roll out Palazzo Versace resorts An exclusive agreement with the House
and has indicated that it hopes to launch a new Palazzo Versace development of Versace
every 18 months, with a view to launching a total of 15 resorts. Potential
locations for the future rollout flagged by management include North America
and Asia.
Under the agreement with Versace, Sunland is responsible for the development
and financing of the projects, while Versace is responsible for the interior design
and fitout with Sunland paying Versace a royalty for use of its trademark (this
amount remains undisclosed).
Palazzo Versace, Gold Coast (51% ownership): Versace, Gold Coast,

comprises 205 six-star rooms and 72 condominiums, with the latter being pre-
sold during the development stage.
As part of the agreed joint venture formed with Emirates International Group
(discussed in further detail in the following sub-section), a 49% share (A$85m)
of Palazzo Versace, Gold Coast, was sold to Emirates International Group in
August 2005.
Palazzo Versace, Dubai (50% ownership): In December 2004, Sunland

announced that it had entered into a 50% joint venture with Emirates Investment
Group (EIG), known as Emirates Sunland Group (ESG), to develop the second
Palazzo Versace hotel and condominiums in the Arabian Bays, Dubai.
Details of the project are as follows:
Q Sunland has project management rights and responsibility for delivery of the
project, while EIG will fund the project. Profits from the project will be
shared 50/50.
UBS 26
Q Project comprises 213 suites and 169 luxury villas (end value of the project
is estimated at A$854.9m), with the villas to be pre-sold prior to completion.
At present 75% of Versace condos have been pre-sold, reducing risk.
Q Development of the project commenced in early 2006 with completion At present 75% of Versace Hotel
anticipated in late 2009. condos have been pre-sold
Q Construction will be undertaken by Arabtec (on a cost-plus contract

arrangement), the second largest construction group in the UAE. Arabtec is
listed on the UAE stock exchange (market cap over US$1bn), with previous
developments including Burj Al Arab and the extension to the Dubai
International Airport. As part of their agreement, Arabtec will also construct
Sunland’s D1 development (discussed in more detail in the International
operations section of this report).
UBS 27
International operations (21% of

FY08E EBIT)
Overview
Sunland presently has 3,014 multi-storey lots across five projects in its Dubai
pipeline.
The expansion into Dubai was first announced in December 2004 when Sunland Major Dubai expansion with 3,014 multi-
entered into a joint venture with Emirates Investment Group (EIG) to construct storey lots across five projects in the
resorts, and residential and commercial projects in the Gulf region. EIG is the pipeline
company associated with Sheikh Tariq bin Faisal Al Qassimi – a member of the
ruling family of Sharjah, which is one of the emirates in the UAE, and chairman
of the Economic Development Board in Sharjah.
Since 2004, Sunland has signed further joint ventures and improved high-profile
relations. Its presence and commitment to the region as the next phase in growth
is clear, with Mr Soheil Abedian, founder and joint managing director, moving
to the region to overlook operations. Mr Abedian is managing director of the
EIG. There is presently a team of around 57 Sunland staff based in Dubai, with
this rapidly expanding as the business grows. Sunland’s JV partners in
respective projects employ the majority of sub-contractors (UAE and offshore
sourced) engaged on the projects.
Development operations
Development operations comprise five projects:
(1) D1 (50% ownership): 80-storey residential tower in a joint venture with

EIG. Completion is due in 2010;
(2) Palazzo Versace, Dubai (50% ownership): 213 suites and 169 luxury villas
in a joint venture with EIG. Completion is due in June 2009. (Further
details provided in the previous section entitled ‘Hotel investments and
operations’.)
(3) First Jebel Ali Waterfront project (50% ownership): comprising 10,000
sq m retail space, 10,500 sq m commercial space, 300 luxury apartments
and 330 serviced apartments. The development is a joint venture with the
Becfar Group. Completion is due in stages from early 2011;
(4) Second Jebel Ali Waterfront project (100% ownership): adjacent to the first
Jebel Ali Waterfront project comprising 5,000 sq m retail space, twin
residential towers and serviced apartments. Completion is due in 2013; and
(5) Culture Village (50% ownership): 26-storey mixed-use residential tower,

also in a joint venture with the Becfar Group. Completion is due in early
2009.
In Table 19 we provide additional detail on each of these projects.
UBS 28
Project management
Sunland is looking to increasingly utilise its project management skills in Dubai
by undertaking the project management role in each of the developments noted
above. This provides Sunland with an additional source of revenue on each
project (project management, design and service management fees) and an
ability to bring its development skills ‘to the table’ in its joint venture
relationships.
In addition to the project management of current projects where it has invested

its own capital, Sunland (via its JV with EIG) is also project manager of a large
community masterplan project in White Bay.
White Bay community masterplan project: Emirates Sunland Group is

project managing the cA$4bn White Bay, Umm Al Quwain masterplanned
community project (announced May 2006). It has no equity participation in the
project. The project comprises approximately 10,000 dwellings (across 20 high-
rise and medium-rise developments) and three hotels. The agreement is with Al
Murjan Real Estate (LLC), a company incorporated with the emirate of Sharjah.
Completion is scheduled for the end of 2011.
Under the terms of the agreement, a project management fee of 2% of total

development cost will be paid to Emirates Sunland. We presently estimate a net
realisation for the project of A$4bn and 40% margin achieved, with a project
duration of eight years from the start of FY09. We note Al Murjan Real Estate is
responsible for the reimbursement of all costs associated with the project
management activities carried out by the JV.
Funds management
Sunland is looking to expend its funds management business to Dubai in the Sunland is embarking on expanding its
medium term. We presently do not assume any funds management income from funds management business into Dubai
the region in our forecasts (given no track record and unproven distribution
channels for Sunland).
UBS 29
Table 19: Dubai projects

Project end value,
Project name Project description Joint ventures / Sunland responsibilities Est. completion date SDG share (A$m) UBS comment
- 50% Sunland with COST PLUS construction

Residential project: 80 stories with 528 - Construction commenced 2H06 43% of total value pre-sold (SDG
D1 Dubai, Business Bay agreement signed with Arabtec (largest c$577.3
apartments - Completion due 2010 announcement; Feb 2007)
construction group in UAE)
- 50/50 joint venture development with EIG

Hotel resort project: 169 condominiums - Construction commenced 1H06
Palazzo Versace, Business Bay - Sunland responsible for design, project c$854.9
& 213 suites - Completion due 2009
mgmt, construction & sales
- Joint Venture with Becfar Group

- Construction to commence 1H'CY09 2,300 sq m site acquired for
Culture Village Mixed use project: 26 stories - Sunland responsible for design, project c$165.7
- Completion early 2009 A$32m in Apr 2007
- Joint Venture development with Becfar

Mixed use project: 10,000 sq m retail space, 3.5ha site acquired for A$107m in
Group (sold 50% interest for A$33m) - Construction to commence 1H08
Dubai Waterfront 1 10,500 sq m commercial space, 300 luxury c$941.1 Feb 2007 (purchase price paid
- Sunland responsible for design, project - Completion early 2011
apartments & 330 serviced apartments over two years)
1.6ha site acquired for A$80m in

Mixed use project: 5,000 sq m retail, twin - Construction to commence in 2H'CY08
Dubai Waterfront 2 100% Sunland c$1,000.0 Oct 2007 (purchase price paid
residential towers, and serviced apartments - Completion in 2013
over three years)
Source: Sunland
UBS 30
UAE and Dubai overview

Figure 2: United Arab Emirates
Source: Google Maps
Region overview (UAE)

Q The significant growth in the Middle East has been underpinned by oil and
gas wealth accumulation, with crude oil price currently cUS$90/barrel
(having not dipped below US$50/barrel in the past two years). The estimated
cost of extracting oil is cUS$20/barrel.
Q Overall, the six nations that make up the Gulf Cooperation Council (GCC) –
including Saudi Arabia, the UAE, Kuwait, Qatar, Bahrain and Oman – have
experienced a strong 7.5% economic growth in CY06 (above the 3.5%
average for 1990-2002).
Chart 15: Economic growth index with 1995 taken as base year
Source: IMF
UBS 31
Chart 16: Economic growth index for major economies based on 2006
Source: Global Insight
Q Over the past few years there has been a significant shift in focus within the
GCC to ensure that the wealth and liquidity created by strong commodity
prices are adequately utilised to ensure strong and sustainable economic
growth in the region long term. This is particularly important given the
limitation of oil reserves (for example, these are estimated to run out in
approximately eight years in Dubai) and/or a potential downturn in
commodity prices.
Q These factors have led to an increased focus on government-led

investments within the region undertaken across the infrastructure, tourism
and leisure, real estate and industrial sectors. For example, in Dubai these
include the Dubai Metro, Dubai International Airport expansion, Burj Dubai
and Dubailand (further detail provided in ‘Dubai overview’ section). Overall,
cUS$1,000bn in construction projects has been announced in the GCC
(between 2005 and 2007), with 43% of this in the UAE.
Chart 17: Construction projects announced in GCC region (projects)
700
600
600
500
400 323
300 246
200 136
100 48 34
0
UAE Saudi Arabia Kuwait Qatar Oman Bahrain
Source: MEED
UBS 32
Q This has also led to an increase in offshore investment with the World
Investment Report (2006) noting a 250% y/y increase in global investments
by GCC nations in 2005 to US$14.1bn. The IMF economic outlook notes
that in 2006 the real non-oil GDP grew by 8% compared to real oil GDP at
1.5%.
Q Strong population growth has also underpinned growth in the region.

Future growth will benefit from continued strong growth rates, with the IMF
forecasting GCC population to nearly double by 2050 to 71.5m people.
Many of these people will be expatriates, with a large number employed in
the development sector (CIA World Factbook estimates c80% of the UAE
population of 4.5m are expatriates).
Q Continued political and economic reforms are making the GCC region
increasingly attractive for foreign investors. For the UAE particularly, the
World Investment Report (2006) notes that it received cUS$12bn in foreign
direct investment in 2005, up 40% y/y.
Table 20: Economic overview
GCC UAE
Population 36.5 million 4.5 million
Population growth rate 2.83% 4.00%
GDP US$592.8 billion US$168 billion
GDP real growth rate 7.5% 10.2%
Labour force 13 million 2.968 million
Inflation rate 4.77% 7.50%
Oil production 16.15 million bbl/day 2.54 million /bbl/day
Oil consumption 2.75 million bbl/day 400,000 bbl/day
Oil export 13.4 million bbl/day 2.5 billion bbl/day
Oil - proved reserves 477 billion bbl 97.8 billion bbl
Natural gas production 187.8 billion m3 46.29 billion m3
Natural gas consumption 147.3 billion m3 40.31 billion m3
Natural gas export 40.5 billion m3 7.18 billlion m3
Current account balance US$193.25 billion US$26.89 billion
Exports US$468 billion US$137.1 billion
Imports US$152 billion US$88.89 billion
Source: CIA World Fact book and IIF (2006)
UBS 33
Dubai
Figure 3: Dubai
Source: Google Maps
Overview
Q Dubai is one of the seven emirates making up the UAE. While each of the
emirates tends to operate autonomously, the UAE is governed by a Supreme
Council of Rulers comprising seven emirs, who in turn appoint a prime
minister and the cabinet. Since 1833, Dubai has been ruled by the Al
Maktoum dynasty, with the city’s current Prime Minister and Vice President
of Dubai being Mohommad bin Rishad Al Maktoum.
Q According to the Dubai Tourism & Commerce Marketing Department (2006),

it is estimated that only c5% of Dubai’s cUS$46bn economy was sourced
from crude oil. Non-oil sources of revenue, including predominantly real
estate, banking and tourism sectors, underpin the economy.
Q The Dubai government continues to make significant investments in the

infrastructure and development. For example, the Dubai Metro is the first
metro project in the city and has an expected cost of US$4.2bn for the first
phase (www.dubaimetro.info). The Metro will look to alleviate the present
traffic congestion in the city and, in turn, continue to draw tourists. The
Department of Civil Aviation has committed US$4.1bn to expand the Dubai
International Airport, with capacity to increase passenger traffic from 21.7m
people in 2004 to 70m by 2016.
Land ownership and the mortgage market

Q In March 2006 the Dubai government passed legislation allowing foreigners
freehold ownership (and 99-year leases) of land and property in certain
designated areas. Each of Sunland’s developments falls within this
designated area, allowing foreigners to acquire lots in its respective projects.
Q It is expected that there will be further development of property ownership

and regulation legislation in this region as the residential market continues to
mature (eg, clearly defined inheritance laws). This will instill further
consumer confidence, particularly amongst foreigners, in making
UBS 34
acquisitions in Dubai. We note that there has been a newly established Real
Estate Regulatory Authority (RERA).
Q With strength in the real estate market there is an increasing number of

participants in the mortgage market. It is estimated that more than 12
commercial banks presently offer fixed, floating and adjustable mortgages.
The estimated average LVR is c70%, with mortgagees largely mid-income
expatriates.
Q There exists no formal regulatory body that governs the administration of

mortgages. This may cause some risk in the event of slowing economic
growth resulting in a rise in defaults (note that with rental yields currently
exceeding mortgage rates, defaults are low).
Population growth underpinning demand

Q Total area is 3,885 sq km, with a population of 1.4m in 2006, comprising
75% males and 25% females. It is estimated that c55% of the population is
aged 16-35 years. (Source: Government of Dubai, Department of Tourism
and Marketing).
Q It is estimated that the population will grow to c1.9m by 2010, implying a

five-year (CY06-10E) CAGR of 6.3%. This compares to a CY00-05 CAGR
of 8.6%. This equates to additional demand for residential units in the range
of 40,000-50,000 units. (Source: EFG Hermes)
Q Expatriates make up c80% of Dubai’s population. Future growth in Dubai’s

population is to be underpinned by the continual influx of these expatriates.
It is estimated that 30% of the estimated expatriate population entering Dubai
will have the means to acquire residential units. This is based on the
expectation that c30% will be earning AED10,000+ (cUS$2700) per month,
which is generally the minimum requirement by lenders.
Q Analysis from Prime Group (2007), the corresponding addressable market

size for demand is 31,800 residential lots in CY07E, 33,900 in CY08E and
36,300 in CY09E. This is slightly conservative relative to EFG Hermes’
forecast of 40,000 to 50,000 in demand for lots each year.
Table 21: Prime Group demand forecasts for residential lots
2006 2007F 2008F 2009F
Population 1,509,000 1,615,000 1,728,000 1,849,000
Change in population 106,000 113,000 121,000
Addressable market (%) 30% 30% 30%
Addressable market share 31,800 33,900 36,300
Source: Prime Group (2007) estimates
Q Clearly, the main risk on the demand side is a slowdown in Dubai (or the
broader UAE’s) economic growth, which in turn will cause a slowdown in
expatriates entering the region (or to cause some to leave). Further, adverse
events arising from political risk could also cause business activity to slow.
UBS 35
Supply
Q In the past three years, demand has significantly outpaced supply causing
significant increases in both selling prices (c18-50% in 2006) and rentals
(c30%+ in 2006).
Q Large-scale developments in the region are being undertaken to balance the

demand/supply mismatch. The largest developers in the region include
Nakheel (52% of total estimated 2007 lot deliveries), Emaar Properties
(c18%) and Dubai Properties (c7%), with other smaller domestic and
international players, such as Sunland, also prominent in the region
(‘others’<25%). (Source: EFG Hermes (Dec 2006)
Q The table below represents Prime Emirates’ expectations for delivery over
the CY07-09 period, based on announced completion dates. A premium is
applied for the smaller developments not included in the table.
Table 22: Planned roll-out schedule of residential units
2007F 2008F 2009F
Dubai Marina 9,000 8,667 8,667
Jumeirah Lake Towers 4,000 4,000 4,000
International City 10,000 10,000 -
City of Arabia - 10,000 -
Dubai Festival City 2,500 2,500 2,500
Discovery Gardens 6,000 11,000 9,000
Palm Jumeirah 3,000 2,900 2,900
Arabian Ranches 1,000 1,000 -
Views 1,066 1,066 1,066
Burj Dubai Downtown 1,800 4,525 4,525
Mohammad Bin Rashid Housing Program - 2,000 2,000
Other 3,102 10,552 17,752
Total 41,468 68,210 52,410
Premium 5.00% 10.00% 15.00%
Total Planned Roll-Out 43,541 75,031 60,272
Source: Prime Group (2007) estimates
Q Based on the above analysis, it is clear that if we assume no delays in project

delivery, the supply of residential lots is forecast to significantly outpace
demand in 2008 and 2009.
Potential future oversupply?

Q Future year forecasts on the state of the Dubai residential market varies
amongst researchers given the diversion in estimated population growth,
economic growth and (most critically) project delays given labour constraints.
Prime Group sees project delays alleviating the forecast supply/demand

imbalance in 2008. It notes: “We expect the problem of delays to persist in
the foreseeable future due to construction and utility capacity related issues,
implying that actual delivery timelines will continue to lag announced roll-
UBS 36
out schedules. This in turn should go a long way in ensuring that a sizeable
oversupply does not occur until 2009”.
Q Overall, the cautious view on prices and potential oversupply in future years
is qualified by several factors that must be considered, including:
— quality of product, location and style of product (villas versus apartment)

will mean that some developments will be impacted more than others;
— pre-sales become a major factor for developers, with those able to secure
more pre-sales much better positioned in a downturn;
— it is well documented that there is a shortage of well-qualified contractors

(local or foreign) operating in the UAE. This factor, coupled with the
strong development demand and tight development schedules, has caused
many projects to be delayed. For example, the man-made island of Palm,
Jumeirah (constructed by Nakheel) was expected to be fully developed by
the end of 2008, but construction delays will see completion delayed to
2009.
Depending on the level of project delays (EFG Hermes in one analysis

sees 50% of projects delayed from years 2008 to 2010 as realistic), prices
may experience a softer landing; and
— population growth estimates may be proved conservative if current

economic growth in the region continues to strengthen. This would
underpin continued demand for residential lots and support residential
unit prices.
Any increased supply in future years is expected to cause rents to fall.

However, given the inherent under-renting of some properties (given the
rental cap of 7% increase per year, although difficult to enforce), this
correction may not be as pronounced as sale prices.
Other risks
Q Economic – The main risk to the continued solid economic growth in the
region is the presently high inflation levels (CY06 CPI was 9.5%). The
government is taking proactive steps to curb inflationary pressures (such a
7% rental cap increase per year) to ensure sustainable growth. In the event of
an economic slowdown, a fall in the number of expatriates entering the
region and/or leaving will significantly impact the real estate market.
Q Tax – The UAE is appealing to foreign investors given no taxation is

imposed by the governments (albeit indirect taxes are imposed). This drove
the high 90% EBIT/revenue margin achieved by Sunland in FY07, with the
margin erosion due to head office business costs. Risks of higher taxes
(although not envisaged in the near term) could affect the profitability of
offshore investors.
Q Legal – The UAE is subject to a complex legal system comprising a

combination of federal, emirate and Islamic law. While the UAE presently
encourages foreign investment in the region (while maintaining strict
UBS 37
controls on foreign ownership in certain regions), changes in these laws to

further protect local interests could adversely affect foreign investors.
Q Security – We do not view security risks in the region as high-risk, given

long-term stability both politically and socially. However, surrounding the
UAE is an inherently unstable region.
Summary
Sunland is trading at a 11.3x FY09E P/E (versus the emerging industrials at Sunland is trading at a 11.3x FY09E P/E
14.5x) and offers a 3.5% FY09E DPS yield (emerging industrials c5.1%). We (versus the emerging industrials at
estimate a five-year EPS CAGR (FY08-13E) of 11.6% underpinned by the 14.5x) and offers a 3.5% FY09E DPS
Dubai business. In terms of Dubai, delivery and growth is premised on yield (emerging industrials c5.1%).
adequately managing JV relationships, staffing resources, economic risks and
project completion timing and budgets. Other key risks in doing business in the
region include tax, legal and security risks causing instability.
We see potential upside to our estimates via growth of Sunland’s funds

management business, and commercial and industrial development business.
However, the lack of track record has kept our assumptions in relation to these
businesses relatively conservative.
The continual rollout of the proven Versace hotels and resorts concept also
provides upside. However, the decision to enter a new region does present some
risk (given a lack of market knowledge and the stretching of resources) and will
be watched closely by investors.
Valuation: Our three-stage DCF (calculated discounting diluted EPS) derives a Our three-stage DCF derives a one-year
one-year price target of $4.95 (beta 1.19 as observed, with a five- to ten-year price target of $4.95 – we initiate
and terminal EPS growth of 3.75% and 2.5%, respectively). This matches our coverage with a Buy rating
secondary FY09E SOTP valuation of $4.95 using a weighted EBITDA multiple
of 12.9x. We therefore initiate coverage with a Buy rating.
UBS 38
Sunland (SDG.AX)
21-Dec-07
MARKET INFORMATION COMPANY DESCRIPTION
Rating: Buy Sunland Group is an integrated property group in the S&P/ASX 200 with businesses
Price (as of 21-Dec-07): 4.43 PROFILE-
4.95 across property development (both multi-storey and residential), land subdivision,
Price Target (12 months):
Issued Capital: 320.7 project management, hotel ownership and funds management. The business was
Market Capitalisation: 1,363.0 originally founded in Queensland, Australia, in 1983 but now has operations across
Avg. daily turnover (US$m) 2.8 Australia (Queensland, Victoria and New South Wales), as well as Dubai (residential
Year end: June and hotel development since December 2004).
Website: -
Major Shareholders: -
INVESTMENT SUMMARY DIVISIONAL BREAKDOWN

(A$m) 2007 2008E 2009E 2010E (A$m) 2007 2008E 2009E 2010E
Total Revenue 630 526 481 573
Net profit [reported] $m 88.1 94.8 120.1 169.3 Division 1 76.2 77.8 83.4 89.4
Net profit [adjusted] $m 88.1 94.8 120.1 169.3 Division 2 73.4 102.5 108.7 115.3
EPS [reported] ¢ 29.7 29.8 37.7 53.2 Division 3 430.0 277.0 121.1 164.6
EPS [adjusted, diluted] ¢ 29.7 29.8 37.7 53.2 Division 4 9.8 10.0 10.7 11.5
EPS Growth % 21 0 27 41
PER [adjusted] x 10.5 14.3 11.3 8.0
PER relative [ex-fin weighted. avg] x 0.66 0.99 0.86 0.65
Dividend ¢ 12.6 14.0 17.7 25.0
Payout ratio % 43 47 47 47 EBIT 166.0 130.7 152.6 208.5
Dividend Yield % 5.8 4.7 6.0 8.4 Division 1 27.9 23.3 25.0 26.8
FCF Yield % 12.9 9.5 11.1 15.2 Division 2 4.8 12.3 13.0 13.8
Franking % 30 30 30 30 Division 3 113.3 62.2 27.2 36.9
Shares [period-average, diluted] m 296.9 318.6 318.6 318.6 Division 4 9.7 -4.5 -4.8 -5.2
PROFIT AND LOSS PROFIT AND LOSS [HALF YEAR]

(A$m) 2007 2008E 2009E 2010E (A$m) 1H07 2H07 1H08E 2H08E
Revenue 630 526 481 573 Revenue 203 415 220 248
EBITDA 169.1 134.1 156.3 212.7 EBITDA 50.9 105.9 35.2 39.7
Depreciation & Amortisation -3.1 -3.4 -3.8 -4.2 Depreciation & Amortisation -1.6 -0.3 -0.3 -0.3
EBIT 166.0 130.7 152.6 208.5 EBIT 49.3 105.7 35.0 39.5
Net interest -41.9 -7.2 -14.5 -20.2 Net interest -3.8 -38.1 -3.4 -3.8
Equity Associated NPAT 0.0 0.0 0.0 0.0 Equity Associated NPAT 0.0 0.0 0.0 0.0
Profit before tax 124.1 123.5 138.1 188.4 Profit before tax 45.5 67.6 31.6 35.6
Tax expense -36.0 -28.7 -17.9 -19.0 Tax expense -11.8 -11.8 -8.7 -9.8
Minority Interests 0.0 0.0 0.0 0.0 Minority Interests 0.0 0.0 0.0 0.0
Dividends (preferred) 0.0 0.0 0.0 0.0 Dividends (preferred) 0.0 0.0 0.0 0.0
Net Profit [reported] 88.1 94.8 120.1 169.3 Net Profit [reported] 33.7 55.8 22.9 25.8
Abnormal Gain/(Loss) after Tax 0.0 0.0 0.0 0.0 Abnormal Gain/(Loss) after Tax 0.0 0.0 0.0 0.0
Net Profit [adjusted] 88.1 94.8 120.1 169.3 Net Profit [adjusted] 33.7 55.8 22.9 25.8
BALANCE SHEET ENTERPRISE VALUE

(A$m) 2007 2008E 2009E 2010E (A$m) 2007 2008E 2009E 2010E
Cash & equivalents 116 18 20 28 Market capital 922.1 1363.0 1363.0 1363.0
Accounts receivable 76 76 76 77 + net (cash) / debt 175.7 52.6 176.9 246.9
Inventory 503 703 853 878 + other adjustments 0.0 0.0 0.0 0.0
Fixed assets 43 43 43 43 Core Enterprise Value 1097.8 1415.6 1539.9 1609.9
Intangibles 0 0 0 0
Investments 5 5 5 5 EV Ratios
Other 38 39 39 39 EV / EBIT x 6.6 10.8 10.1 7.7
Total Assets 780 883 1036 1070 EV / EBITDA x 6.5 10.6 9.8 7.6
Accounts payable 128 131 134 137 EV / OpFCF [post-tax] x 6.5 10.6 9.8 7.6
Short term & long term debt 98 141 251 291
Provisions & other 55 51 51 51
Total Liabilities 280 322 436 479
Minorities 0 0 0 0
Preferred securities 0 0 0 0
Common Equity 500 561 600 591
Total Liabilities & Equity 780 883 1036 1070
CASH FLOW RATIOS

(A$m) 2007 2008E 2009E 2010E 5 Yr. Avg 2007 2008E 2009E 2010E
Operating income [EBIT, UBS] 166.0 130.7 152.6 208.5 Profitability
Depreciation 3.1 3.4 3.8 4.2 Revenue growth % - 28.9 -16.4 -8.7 19.3
Net change in working capital 0.0 0.0 0.0 1.5 EPS growth % - 21.3 0.3 26.7 41.0
Other (operating) 0.0 0.0 0.0 0.0 EBITDA margin % - 26.9 25.5 32.5 37.1
Pre-tax operating cash flow 169.1 134.1 156.3 214.2 EBIT margin % - 26.4 24.8 31.7 36.4
Interest (paid) / received -41.9 -7.2 -14.5 -20.2 Tax rate % - 29.0 23.2 13.0 10.1
Tax paid -36.0 -28.7 -17.9 -19.0 Return on Invested Capital % - 27.6 22.6 20.3 24.9
Other 0.0 0.0 0.0 0.0 Return on Equity % - 20.3 17.9 20.7 28.4
Operating cash flow 91.2 98.2 123.9 175.0
Capital expenditure 28.7 -186.8 -175.0 -125.0 Balance Sheet
Free cash flow 119.9 -88.6 -51.1 50.0 Net Debt / EBITDA x - 1.0 0.4 1.1 1.2
Net (acquisitions) / disposals 0.0 0.0 0.0 0.0 Net Debt / Equity % - -3.6 21.9 38.4 44.5
Dividends (Common) -37.4 -44.6 -56.5 -79.6 Capex / Depreciation x - <0 >10 >10 >10
Share Issues 161.3 0.0 15.0 0.0 Net interest cover [EBIT] x - 4.0 18.1 10.5 10.3
Book Value Per Share $ - 1.6 1.8 1.9 1.9
Source: Company accounts, UBS estimates. UBS valuations are stated before goodwill, exceptionals and other spcieal items. Note: For some companies, the data represents an extract of the full company accounts.
UBS 39
Q Sunland Group
Sunland Group is an integrated property group in the S&P/ASX 200 with

businesses across property development (both multi-storey and residential), land
subdivision, project management, hotel ownership and funds management. The
business was originally founded in Queensland, Australia, in 1983 but now has
operations across Australia (Queensland, Victoria and New South Wales), as
well as Dubai (residential and hotel development since December 2004).
Q Statement of Risk
Methodology utilised is a 12-month forward 3-stage DCF analysis, deriving a

PV of DPS (norm.) utilising a discount rate derived from the CAPM approach.
Risks include those associated with operating in the real estate
investment/management environment, and risks associated with the regulatory,
planning and capital raising environment. Valuation risks include the changing
Rf rate under CAPM analysis.
Q Analyst Certification
Each research analyst primarily responsible for the content of this research
report, in whole or in part, certifies that with respect to each security or issuer
that the analyst covered in this report: (1) all of the views expressed accurately
reflect his or her personal views about those securities or issuers; and (2) no part
of his or her compensation was, is, or will be, directly or indirectly, related to
the specific recommendations or views expressed by that research analyst in the
research report.
UBS 40
Required Disclosures
This report has been prepared by UBS Securities Australia Ltd, an affiliate of UBS AG. UBS AG, its subsidiaries,
branches and affiliates are referred to herein as UBS.
For information on the ways in which UBS manages conflicts and maintains independence of its research product;
historical performance information; and certain additional disclosures concerning UBS research recommendations,
please visit www.ubs.com/disclosures.
UBS Investment Research: Global Equity Rating Allocations
UBS 12-Month Rating Rating Category Coverage1 IB Services2
Buy Buy 55% 40%
Neutral Hold/Neutral 36% 35%
Sell Sell 9% 22%
3
UBS Short-Term Rating Rating Category Coverage IB Services4
Buy Buy less than 1% 29%
Sell Sell less than 1% 0%
1:Percentage of companies under coverage globally within the 12-month rating category.
2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided within
the past 12 months.
3:Percentage of companies under coverage globally within the Short-Term rating category.
4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were provided
within the past 12 months.
Source: UBS. Rating allocations are as of 30 September 2007.

UBS Investment Research: Global Equity Rating Definitions
UBS 12-Month Rating Definition
Buy FSR is > 6% above the MRA.
Neutral FSR is between -6% and 6% of the MRA.
Sell FSR is > 6% below the MRA.
UBS Short-Term Rating Definition
Buy: Stock price expected to rise within three months from the time the rating was assigned
Buy
because of a specific catalyst or event.
Sell: Stock price expected to fall within three months from the time the rating was assigned
Sell
because of a specific catalyst or event.
UBS 41
KEY DEFINITIONS
Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12
months.
Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a
forecast of, the equity risk premium).
Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are
subject to possible change in the near term, usually in response to an event that may affect the investment case or valuation.
Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect any
change in the fundamental view or investment case.
EXCEPTIONS AND SPECIAL CASES

UK and European Investment Fund ratings and definitions are :
Buy: Positive on factors such as structure, management, performance record, discount; Neutral: Neutral on factors such as
structure, management, performance record, discount; Sell: Negative on factors such as structure, management, performance
record, discount.
Core Banding Exceptions (CBE) : Exceptions to the standard +/-6% bands may be granted by the Investment Review
Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's
debt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating.
When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.
Company Disclosures
Company Name Reuters 12-mo rating Short-term rating Price Price date
Sunland Group SDG.AX Not Rated N/A A$4.43 21 Dec 2007
Source: UBS. All prices as of local market close.
Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricing
date
This report may contain a discussion and analysis of both equity and fixed income securities of the same issuer. The opinions or
recommendations with respect to an equity security may be different from those for a fixed income security due to a number of
factors including, but not limited to, the type of security involved and its characteristics, the nature of the market for that security,
the analytical methodology employed for that type of security, the assumptions utilized under the particular methodology and the
UBS rating system applicable to that type of security.
Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.
Sunland Group (A$)

Price Target (A$) Stock Price (A$)
5.00
4.00
3.00
2.00
1.00
0.00
01-Dec-04
01-Feb-05
01-Jun-05
01-Aug-05
01-Dec-05
01-Feb-06
01-Jun-06
01-Aug-06
01-Dec-06
01-Feb-07
01-Jun-07
01-Aug-07
01-Dec-07
01-Oct-04
01-Apr-05
01-Oct-05
01-Apr-06
01-Oct-06
01-Apr-07
01-Oct-07
No Rating
Source: UBS; as of 21 Dec 2007
UBS 42
Global Disclaimer
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This report is for distribution only under such circumstances as may be permitted by applicable law. Nothing in this report constitutes a representation that any investment strategy or
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ab Global Equity Research

growth; Buy RIC: SDG.AX BBG: SDG AU

EPS (UBS, A$) 0.289 0.297 0.298 0.377 0.532 4.00

EBIT margin % - 26.4 24.8 31.7 36.4 1.00

ROIC (EBIT) % - 27.6 22.6 20.3 24.9

Net dividend yield % - 4.0 3.3 4.2 5.9 Source: UBS

John Freedman Chad Mikhael

This report has been prepared by UBS Securities Australia Ltd

Contents page John Freedman

Funds Mgmt International 70% 65%

Dev . 20% 12%

Hotel Inv. &

Source: UBS estimates Source: Sunland, UBS estimates

(1) Joint venture relationships – Sunland has already established a joint

EIG is presently a 50% JV partner in the A$854m Palazzo Versace, Dubai

Sunland predominantly undertakes the role of construction manager within

(2) Financing – Funding for development projects in the UAE is considerably

region to ensure future economic growth is sustained, a development boom

(5) Residential supply – As we detail in our ‘Region Overview (UAE)’ section

In our forecasts of Sunland’s Dubai developments, we have allowed some

Palazzo Versace, Business Bay CY09 CY11

Culture Village CY09 CY12

D1 Dubai, Business Bay CY10 CY12

Dubai Waterfront 1 CY11 CY13

Dubai Waterfront 2 CY13 CY15

Visibility of earnings: We are relatively conservative on our project

(A$m) Jun-08E Jun-09E Jun-10E Jun-11E Jun-12E

Multi-storey (Aust) Revenue 277 121 165 40 55

… % identified 100% 100% 85% 0% 0%

Land subdivision (Aust) 78 83 89 96 102

… % identified 100% 100% 100% 100% 100%

Residential (Aust) 102 109 115 122 130

… % identified 100% 100% 100% 100% 22%

Commercial & Ind (Aust) 10 45 25 30 35

… % identified 100% 100% 0% 0% 0%

International developments 33 92 147 205 150

… % identified 100% 100% 100% 100% 90%

… % identified 67% 66% 0% 0% 0%

Total Revenue (excl other/eliminations) 513 463 555 507 487

Source: UBS estimates

Management: Sunland is headed up by Managing Director Sahba Abedian (a

New geographic location: Management intends to decide in CY08 on its

Pricing metrics: We estimate that Sunland is currently trading at an FY09E

We note our FY08E NPAT of $95m is in line with management guidance

With an estimated payout of 47% (Sunland is targeting 45-50%), Sunland offers

Valuation: Our three-stage DCF derives a one-year price target of $4.95. We

Our secondary SOTP approach also derives a valuation of $4.95 using a

With a forecast implied 12-month return of 26.2%, we initiate coverage of

EBIT 2006 2007 2008E 2009E 2010E 2011E 2012E

…Urban Land $26 $28 $23 $25 $27 $29 $31

…Housing $5 $5 $12 $13 $14 $15 $16

…Multi-storey $106 $113 $62 $27 $37 $9 $12

…Hotel Invs & Ops $1 $1 $0 $1 $1 $1 $1

…Commercial & Industrial $0 $0 $2 $7 $4 $5 $5

…International incl Proj Services $0 $7 $28 $78 $125 $174 $127

…Other / Eliminations ($15) $10 ($4) ($5) ($5) ($6) ($6)

EBIT (Core) $123 $166 $131 $153 $209 $233 $194

…Growth 124% 22% 8% 27% 41% 18% -22%