Friday, September 3, 2010

AmResearch: Sunway Lagoon acquisition strategic move, but minimal impact on SunCity earnings

KUALA LUMPUR: AmResearch says Sunway City's (SunCity) plan to buy an additional 45% stake in Sunway Lagoon Sdn Bhd (SLSB) for RM129 million as a strategic move to strengthen its earnings.

It said on Friday, Sept 3 that while impact to SunCity's earnings should be minimal in FY10, it estimates this exercise would provide an uplift of about 16% to its'' EPS in FY11F.

'We understand that the take-up rate for South Quay's latest offering - i.e. the condominium development called 'A'Marine' - has reached 70% from 50% previously with average pricing of RM500psf,' it said.

However, AmResearch said demand for Bayrocks bungalow remains subdued at 40%. SunCity launched RM966 million worth of PROPERTIES [] in the 1HFY10. Going forward, the group will be launching RM800 million worth of properties in 2HFY10 - including Sunway VeloCity.

'On the flipside, this quarter will see the final contributions from its assets - as Sunway City REIT was recently listed in early July. We are putting our HOLD recommendation and fair value under review with a downside bias - pending a meeting with the management,' it said.


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