SUNWAY: Strategic Land Acquisition in Singapore Boosts Future Outlook, Target Price Raised
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | MYR5.83 (+10%) |
| Last Traded | MYR5.29 |
| Recommendation |
A leading property and construction conglomerate has successfully secured a second strategic land parcel in Chuan Grove, Singapore, alongside its joint venture partner. This significant acquisition is expected to enhance the group’s development scale and operational efficiencies, leading to a maintained “BUY” recommendation and an increased target price.
Strategic Expansion and Operational Synergies
The newly awarded 3.6-acre land parcel, secured from Singapore’s Urban Redevelopment Authority for SGD623.91 million, is a strategic move, complementing a 3.9-acre adjacent parcel won earlier in July. This combined larger development spanning 7.5 acres is anticipated to yield substantial synergies, particularly in achieving more efficient construction and marketing costs. Management’s proactive approach to growth is set to ensure a stable earnings trajectory, further bolstered by the impending listing of its healthcare arm in early 2026.
The land, with a 99-year lease term, is designated for residential development, with the consortium holding a 65% (Sing Holdings) and 35% (the group) equity interest. The acquisition will be funded through internal funds and borrowings. Notably, the purchase price for this second parcel is 3-4% more cost-effective compared to the rate for the initial parcel.
The site’s prime location offers excellent connectivity, being within walking distance to the Lorong Chuan MRT station and just one stop away from major interchanges like Bishan and Serangoon. It also benefits from proximity to a host of amenities, including commercial hubs and educational institutions. A total of 1,050 residential units are planned across both parcels, with the second parcel alone estimated to have a Gross Development Value (GDV) of SGD1.4-1.5 billion, offering mid-range products expected to attract strong demand due to the enhanced scale and facilities.
Future Outlook and Financial Implications
Analysts maintain net profit forecasts for FY25-27, with earnings from the second parcel anticipated to contribute significantly from FY28 onwards. The project rollout is scheduled for 2H26 for the first parcel, followed by the second parcel in 1H27. Near-term earnings are well-supported by a robust unbilled sales backlog of MYR3.7 billion and an outstanding construction orderbook totaling MYR6.7 billion.
The target price has been uplifted to MYR5.83, from MYR5.81 previously, incorporating the incremental value derived from the updated RNAV estimate. This revised target price includes an 8% ESG premium, reflecting the company’s strong ESG score of 3.4 out of 4.
