KUALA LUMPUR: RHB research is positive on Sunway Bhd's latest land deal with PKNS given the land costs' deferred payment scheme, which will not put a strain on cash flow, as well as the group's track record in Kota Damansara.

It said in a note that the deal is in line with the group's strategy to execute fast turnaround projects to rise through the current slowdown in the property market.

"Its past “one-off” projects, such as Sunway Mont Residences and Sunway Avila in Wangsa Maju have been well received," it added.

RHB raised its its earnings forecast for FY21 by 1% as it expects the project have its maiden launch in the second half of 2020.

To recap, Sunway yesterday announced that its 60%-owned joint venture Sunway PKNS had entered into a privatisation agreement wtih Perbadanan Kemajuan Negeri Selangor (PKNS) to accept the rights to develop a 9.458-acre leasehold land in Kota Damansara.

"Sunway will have to pay a total of MYR124.6m progressively, comprising MYR36.6m for the rights to develop; MYR50m or 8.88% of GDV as revenue sharing – to be paid in four tranches up to the completion of the project; and 40% profit sharing, which is approximately MYR38m," it said.

RHB said the land cost of about RM300 psf is reasonable as the payment for the rights' value and revenue are on a deferred payment basis. 

The tract has a plot ratio of four, and will be developed into serviced apartments of about 825 units with some lifestyle retail units.

The project has an estimated GDV of RM544mil with a development period of five years to 2025.

RHB maintained its buy call in Sunway Bhd with a higher target price of RM1.86 from RM1.85 previously 

"We like Sunway for its opportunistic landbank strategy, and investments in the quarry division. 

"Near-term earnings should be underpinned by MYR2.2bn unbilled sales, and MYR5.7bn outstanding construction orderbook," it said.