Sunsuria: An Attractive Property Stock

Background

Sunsuria is the developer of a new township next to KLIA, known as Sunsuria City. This township is relatively small with a land size of 525 acres. Its estimated Gross Development Value is only RM10 billion. 

The main attraction for Sunsuria City is the Xiamen University Malaysia. In addition, the township has good connectivity, and it's still not fully developed yet. For more on Sunsuria City, go here. 

Sunsuria City- Master Plan 

Sunsuria City- Connectivity

Recent Financial Performance

For QE30/9/2018, Sunsuria’s net profit dropped 2.6% q-o-q or 17.7% y-o-y to RM24.9 million while revenue rose 24% q-o-q or 24% y-o-y to RM134 million. See accompanying table. The result for QE30/9/2018 was announced on November 27 last year. The next quarterly result will be for QE31/12/2018, which is expected to be announced end of February.

Table: Sunsuria's last 8 quarterly results

Past 5 years’ Financial Performance

Despite the slowdown in property market, Sunsuria is able to maintain its revenue at about RM120-140 million a quarter in the past 7 quarters. Its net profit is also fairly stable at RM40 million over the same periods. 

Graph: Sunsuria's last 42 quarterly results

Financial Position

As at 30/9/2018, Sunsuria's financial position is deemed healthy with good current ratio at 3.5x while slightly elevated gearing ratio at 0.6x.

Valuation

Sunsuria (closed at RM0.63 last Friday) is now trading at a trailing PE of 5 times (based on last 4 quarters' EPS of 12.7 sen). At this PE, Sunsuria is deemed fairly valued.

Technical Outlook

Sunsuria share price peaked at RM1.60 in July 2017. It has lost nearly RM1.00 in the past 18 months despite relatively stable revenue and profits. At 63 sen a-piece, Sunsuria is now trading a mere 30 sen above the price paid by the new management when it took over the company- previously named Malaysian Aica Bhd. 

Chart: Sunsuria's weekly chart as at Feb 18, 2019_11.00am (Source: Malaysiastock.biz)

Conclusion

Based on good financial performance, fairly attractive valuation and deeply discounted share price, Sunsuria is a good property stock to consider for a recovery play.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.