PETALING JAYA: Analysts are mixed on Sunway Bhd’s earnings outlook for financial years 2022 (FY2022) and 2023 despite posting better profit and revenue in the third quarter ended Sept 30 (Q3 FY2022).
On Friday, Sunway announced its Q3 FY2022 results which saw its net profit jumping 126% to RM164.72 million from a year earlier, supported by stronger contributions from most business segments.
Revenue was 48.3% higher at RM1.27 billion versus RM856.92 million previously, contributed by higher revenue recorded from all business segments.
RHB Research said in a note today that it is maintaining a buy recommendation on Sunway with a target price (TP) of RM2.06, a 30% upside with an approximate forecast yield of 3% for FY2022.
“Sunway’s Q3 FY2022 results outperformed expectations. Its property investment division continued to see encouraging growth.
“Although there could be some downside risk to its RM2.2 billion sales target – given the impact of the interest rate hikes – we think the group’s leisure, hospitality and healthcare segments should continue to benefit from the recovery in the domestic leisure and medical-related tourism sectors,” it said.
In view of the stronger-than-expected earnings, it has raised its FY2022-2024 earnings forecast by between 14% and 15%.
Maintaining its outperform call, Kenanga Research expects its leisure and hospitality segment – as reflected in its property investment segment – to have room for improvement as it is performing below pre-Covid 19 levels.
“We raise our FY2022-2023 earnings forecast by between 18% and 20% to reflect a higher property sales assumption of RM1.9 billion and stronger contributions from its property investment and healthcare segments.
“Consequently, its sum-of-parts-TP is raised by 5% to RM2.15 (from RM2.05) anchored by a 65% discount to revalued net asset value for its property segment in line with peers under our coverage,” Kenanga said.
Meanwhile, MIDF Research maintained a neutral call on Sunway with an unchanged TP of RM1.63, as the company’s nine months RM417.3 million core net earnings for financial year 2022 (9MFY22) came in above consensus expectation.
“We make no changes to our earnings forecast for FY2022/23.
“Earnings prospect for Sunway remains stable with contribution from its property investment division. Nevertheless, we think that the positives have been largely priced in,” it said.
As for CGS-CIMB, it reiterated a hold call on the company with a lower TP of RM1.73 despite the company’s 9MFY2022 results above their expectations with core net profit surging 190% year-on-year.
“We raise FY2022-2024 earnings forecast per share by 5.4% and 11% on stronger construction billings and property investment revenue as well as higher associate/joint-venture profits,” it added.