Aurora Melbourne Central
KUALA LUMPUR: MIDF Equities Research is maintaining a Neutral recommendation for property developer UEM Sunrise with slightly higher target price of RM1.11.
The research house said on Friday UEM Sunrise had inked a deal with Ascendas Hospitality Trust to sell the serviced apartments component of the La Trobe Street mixed-use development, Aurora Melbourne Central (AMC), for A$120mil(or RM371mil).
The serviced apartments component sold include 252 service apartments from level 10 to level 32 of Aurora Melbourne Central; common facilities for guests located at level 9, and a restaurant located at ground floor.
Profit from the sale amounted to A$27mil (or RM83mil) but recognition will only be in FY19 as projects in Australia are recognised upon completion.
“We gather that for the other A$550mil GDV which consists of 941 residential apartments, UEM Sunrise has achieved take-up rate of 98% (already included in our FY15 and historical sales). The remaining A$100mil of GDV (retail and offices) is likely to be launched in FY16 or FY17.
“We are positive on the news as UEMS will be able to focus its resources on marketing and selling its other Melbourne projects. Note that managing serviced apartments is not the core business of UEMS.
“On track to achieve FY15 sales target. As UEM Sunrise has achieved sales of RM1.18bil in 9MFY15, cumulative sales (including the sale of serviced apartments for RM371mil) will be RM1.56bil.
“This makes up 80%/78% of our/management sales target of RM1.95bil/RM2bil for FY15. Hence, we believe that UEM Sunrise is on track to achieve its full year sales target.
“We have included the future profit of RM83mil in FY19 into our RNAV calculations hence increasing our target price by one sen. Our methodology is unchanged by using 50% discount to RNAV,” said MIDF Research.
