UEM Sunrise expected to ride out soft demand in Johor

PETALING JAYA: UEM Sunrise Bhd, one of the biggest property developers in the country, is expected to ride out the current soft demand in Johor property market considering the advantage it has holding its land at low cost, said PublicInvest Research.
The research firm said UEM Sunrise's high exposure in Johor has now obviously become a thorn in the flesh due to the difficult trading environment on oversupply concerns and a crowded market.
"With the land cost advantage, we still believe in the group's longer term prospects, with key re-rating catalysts from strong sales and investments from reputable developers," it said in a note yesterday.
In view of this, the research firm has maintained its 'outperform' recommendation on UEM Sunrise with a target price of RM2.60.
PublicInvest Research said UEM Sunrise netted RM439 million in new sales for the first half of 2014, with 69% coming from non-Nusajaya area.
"We understand that UEM Sunrise aims to rake in RM800 million from its RM1.3 billion project in Melbourne, Australia (The Aurora) and the rest from existing townships such as East Ledang, Nusa Idaman, Nusa Bayu.
The Aurora, which was launched last week is said to have garnered 200 bookings out of 341 units released.
As indicated earlier, it said UEM Sunrise has in the pipeline projects outside Nusajaya such as Serene Heights in Bangi, Sinaran Hills in Kajang, Solaris 3 and Angkasa Raya (Aurora Tower) in Kuala Lumpur City Centre (KLCC). It said these projects alone have gross development value of RM10 billion.
As for Nusajaya projects, it believes that UEM Sunrise's land which is strategically located near the various hubs, should see demand picking up in the long term.
It said UEM Sunrise could also participate in more joint ventures such as the one with Gamuda Bhd (1,200 acres, Horizon Hills) and Kuala Lumpur Kepong (500 acres) to unlock land value.