KUALA LUMPUR: Property sales could be challenging for UEM Sunrise Bhd in the financial year 2022 (FY22) mainly due to the lack of catalyst, said Hong Leong Investment Bank (HLIB) Research.
The research house said the Home Ownership Campaign (HOC), which ended in December 2021, will impact UEM Sunrise's property sales for this year as the campaign has contributed about 80 per cent of its sales in FY21.
Furthermore, the bank-backed research firm said UEM Sunrise's margin could be compressed from the higher raw material costs and lack of ability to increase the selling price.
"Moving into FY22, UEM Sunrise is setting a flattish sales target of RM1.5 billion as well as launches of RM3.3 billion.
"Nonetheless, we foresee narrower losses for FY22 as we expect progressive billings to improve as the project moves into the next stages of construction," the firm said in a note today.
UEM Sunrise reported a narrower FY21 net loss of RM120.4 million, which was below HLIB Research's expectations, mainly due to the shrinking margin.
"The results were below expectations versus our full-year forecast of RM72.9 million and consensus of RM74.5 million.
HLIB Research said UEM Sunrise had achieved sales of RM544.7 million in the fourth quarter (Q4) 2021, which brought FY21 sales to RM1.46 billion, exceeding its sales target of RM1.2 billion.
The firm now forecasts losses of RM23.4 million in FY22, from a profit of RM72.9 million, for UEM Sunrise as it expects margin will shrink from the higher raw material cost.
"Our FY23 forecast also reduced by 42 per cent.
"We reiterate our Hold call on UEM Sunrise with a lower target price of 37 sen from 38 sen, largely due to shrinking margin due to rising raw material costs," it added.