Acquires Prime Land in Kuala Lumpur

Sunway’s wholly-owned subsidiary, Sunway Melawati Sdn Bhd, has signed a sale and purchase agreement to acquire a parcel of freehold land measuring 17.58 acres in Taman Taynton, Kuala Lumpur, from Viva Impian Sdn Bhd for RM320.0mn. The proposed acquisition is expected to be completed by 2Q25.

Strategic Location

The land is strategically located adjacent to Sunway’s ongoing Sunway Alishan residential project in Cheras (refer to Appendix 1 for details). It enjoys proximity to key amenities within a five-kilometre radius, including Sunway Velocity, Taman Tasik Permaisuri Park, Pantai Hospital Cheras, UKM Medical Center, and UCSI University. Public transportation options are highly accessible, with the site just 400 meters from EkoCheras Mall, which connects directly to the Taman Mutiara MRT station. Additionally, we understand that Sunway plans to build direct access from the site to the Middle Ring Road 2, enabling seamless connectivity to major highways such as the Shah Alam Expressway, Grand Saga Highway, EastWest Link, and Maju Expressway – see Appendix 2.

Mixed Development With RM3.2bn GDV

The land is earmarked for a mixed-use development with an estimated gross development value (GDV) of RM3.2bn. The project will feature luxury serviced apartments along with a vibrant retail podium focused on wellness, which includes health and wellness clinics. Aligned with Sunway's commitment to sustainability, it will follow the Sunway Design and Development Architecture, emphasising sustainability, innovation, health and wellness, and lifestyle experiences. Scheduled for launch in early 2027, the development is expected to span over 11 years.

Our View

At a land price of approximately RM418 psf, or 10% of the estimated GDV, the cost is well within the typical range of 10-20%, which we consider to be fair. We view this acquisition as a strategic move that expands Sunway’s land bank in the Klang Valley, aligning well with the group's target of acquiring prime locations for future developments. The proposed freehold, near-to-transit development is poised to address the rising demand for wellness-focused, integrated communities that cater to modern urban lifestyles.

While Sunway Alishan’s 70% take-up rate after two years may seem modest, we are confident that this new project will attract strong interest. Its wellnesscentric retail component, combined with Sunway’s trusted brand and proven track record in delivering healthcare and wellness services, will effectively meet residents' needs and enhance the project's appeal. Furthermore, the upcoming direct access to the MRR2 is expected to significantly enhance connectivity, making it an attractive choice for potential buyers.

Impact

No change to our FY24-26 earnings forecasts for now, pending the completion of the acquisition.

Valuation

We maintain Buy on Sunway with an unchanged TP of RM4.76/share, based on SOP valuation and a 5% ESG premium.

Source: TA Research - 3 Oct 2024