KUALA LUMPUR: MIDF Research is retaining its Neutral call on Sunway Bhd with an unchanged target price of RM3.25 based on sum-of-parts valuation.

It had on Tuesday maintained its earnings forecast for FY16-17 as it had already inputted the earnings contribution from Sunway Velocity mall to its earnings forecast.

“We are keeping our Neutral stance on Sunway due to overall subdued property market outlook,” it said.

MIDF Research released its report after a recent visit to Sunway Velocity Mall in Cheras. The project spans across 23 acres of land in Cheras.

Sunway Velocity is a vibrant integrated development, which comprises office and retail projects, residential projects, Sunway Velocity Hotel, and Sunway Velocity Medical Centre.

Sunway Velocity is 4km away from KL City Centre and with direct link to two upcoming underground MRT stations.

“Sunway Velocity Mall has a net lettable area (NLA) of 880k square feet while secured occupancy rate stood at 90%. We gather that anchor and mini anchor tenants of the mall include Parkson, TGV, AEON Max Value, Grand Imperial, and Harvey Norman,” it said.

The research house said it was surprised by the high occupancy rate of the mall given concerns about oversupply of retail space in Cheras where the upcoming MyTOWN Shopping Centre with NLA of 1.1m square feet is 1.5km away from Sunway Velocity.

“We believe Sunway Velocity Mall should continue enjoy high occupancy rates going forward given the expertise of Sunway Bhd in managing shopping malls and good connectivity of Sunway Velocity.

“On other projects in Sunway Velocity, we gather that Sunway Velocity Hotel, which is a four-star business hotel, is under construction and due for opening by 2H2017. On the other hand, Sunway Velocity Medical Centre with 240 beds is currently under construction with targeted opening in 4Q2018,” it said.