Analysts mixed on Sunway Bhd's earnings forecast for FY2022/2023

29/11/2022 11:54 AM

KUALA LUMPUR, Nov 29 (Bernama) -- 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, 2022 (Q3 FY2022).

On Friday, Sunway announced its Q3 FY2022 results which saw its net profit jumping 126 per cent to RM164.72 million from a year earlier, supported by stronger contributions from most business segments.

Revenue was 48.3 per cent 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 per cent upside with an approximate forecast yield of three per cent 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 forecasts by  betrween 14 and 15 per cent.

Kenanga Research, in maintaining its outperform call, expects the company's leisure and hospitality segment -- as reflected in its property investment segment -- has room for improvement as it is performing below pre-COVID-19 levels.

"We raise our FY2022-2023 forecast earnings by between 18 and 20 per cent 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 five per cent to RM2.15 (from RM2.05) anchored by a 65 per cent 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 per cent year-on-year.

"We raise FY2022-2024 forecast earnings per share by 5.4 and 11 per cent on stronger construction billings and property investment revenue and higher associate/Jont-venture profits," it said.



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