Sunway Berhad: Diversified Investment Holdings in Malaysia and Singapore

Background

Sunway Berhad is an investment holding company, engages in property, construction, education, and healthcare businesses in Malaysia, Singapore, China, Australia, internationally. Sunway Berhad started off as a private limited establishment, Sungei Way Holdings Sdn Bhd, in the tin mining industry on 26 January 1978. Founder and Chairman, Tan Sri Dato Seri Dr Jeffrey Cheah's vision propelled the company's ensuing venture into construction, trading and manufacturing, quarrying, property development and building materials. The business had its share of setbacks but prevailed and grew from strength to strength.

Steady growth for the business subsequently led to the company's listing on the Main Board of Bursa Malaysia on 16 February 1984 as Sungei Way Holdings Berhad. The company changed its name to Sunway Holdings Incorporated Berhad on 13 December 1999 before finally assuming the name of Sunway Holdings Berhad in 2007.

It's vision is Sunway Berhad (Sunway) holds leadership positions in a multitude of industries, chiefly driven by its core businesses of property development and investment; and construction. With a vision of becoming the region's leading property-construction group, we constantly innovate to deliver value, build synergistic and sustainable relationships and achieve the highest standards of quality and excellence.

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It's mission is innovating to deliver value underpins our relentless efforts to drive positive and sustainable change in the way we work and operate to create values for all our stakeholders. Building synergistic and sustainable relationships is the bedrock of the company's ethos of nurturing our people and developing meaningful relationships with external parties including our business partners and customers towards achieving business objectives, while keeping the interests of our stakeholders.

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Achieving the highest standards of quality and excellence remains a founding value that we uphold and are passionate about. We make individual and collective efforts in aiming higher to achieve strategic business goals with a commitment to the best quality and excellence.

Industry Outlook and Information

Established in 1974, Sunway Berhad is one of Malaysia's largest conglomerates with core interests in property, construction, education and healthcare. They are a 16,000-strong team operating in 50 locations worldwide, pulling together to improve the quality of life of their communities through 12 business divisions  property, construction, retail, hospitality, leisure, healthcare, education, commercial, trading and manufacturing, building materials, quarrying and Real Estate Investment Trust (REIT).

Sunway Berhad's unique build-own-operate business model powers the growth of sustainable communities and integrated townships: Sunway City in Selangor, Sunway City Ipoh and Sunway Iskandar in Johor, which span 5,000 acres.

Sunway Berhad's three public-listed companies Sunway Berhad, Sunway Construction, and Sunway REIT, with a combined market capitalisation of RM 17 billion  form a real-estate value chain that exemplifies socially responsible business practices, evidenced by their listing on the FTSE4Good Bursa Malaysia Index.

At Sunway, they are committed to the United Nations Sustainable Development Goals (SDG), and continue to align their business strategies to meet the needs of the communities in line with the SDG agenda.

Through the Jeffrey Cheah Foundation, they provide disadvantaged and deserving young adults access to quality education by disbursing RM330 million and counting in scholarships. The Jeffrey Sachs Center on Sustainable Development, established at Sunway University in 2016, serves as a hub for the education and advancement of sustainability across Southeast Asia. The Center is the first of its kind in Asia.

Our commitment to strong Economic, Environment and Social practices is embedded throughout the organisation  from their policies and their social impact initiatives to day-to-day operations so that they deliver enduring growth for thriving communities.

Financial Statement Analysis

Stock Performance

Stock performance is a measure of the returns on shares over a period of time. There are a number of measures of stock performance and each includes its own characteristics and benefits during an analysis of returns. The period over which stock returns are measured is chosen based on personal preferences, but the portfolio managers usually measure stock performance on daily, weekly, monthly and yearly basis.

Based on picture 1, the overall trend is up as the price remains above its upward sloping trend line. This can be accomplished with the trend lines, moving average or peak/trough analysis. It is also similar when the trend is up as long as higher troughs form on each pullback and higher highs form on each advance.

From the stock performance, the support and resistance levels can be identified by the trend lines. If the price breaks past a support level, that support level often becomes a new resistance level and vice versa as well when the price breaks a resistance level, it will often find support at that level in the future. In this 2 month stock performance, it is going uptrend where resistance occur and the company is expected to pause temporarily due to their concentration to supply.

Corporate issues and recent news

Sunway Bhd has set a sales target of RM1.3 billion for its financial year ending Dec 31, 2019 (FY2019), from proposed projects with a total gross development value (GDV) of RM2 billion. This was revealed at a media briefing held in Kuala Lumpur on Jan 24. According to Sunway property division managing director Sarena Cheah, the target is based on the group's better-than-expected sales performance in the previous financial year (FY2018), where it achieved sales worth RM1.8 billion.

We exceeded our 2018 sales target of RM1.3 billion and we closed the year with RM1.8 billion, mainly from Sunway GEOLake Residences and the first block of the first phase of Sunway Velocity TWO in the Klang Valley; Rivercove Residences EC in Singapore; Citrine Lakehomes @ Sunway Iskandar in Johor; as well as Sunway Garden in Tianjin, China. All these five projects achieved very good sales, averaging 85% to 90%, said Cheah. As overseas projects contributed close to 40% to overall sales in FY2018, Sunway will continue to look at other mature countries, such as Australia and the UK, Cheah added.

Sunway already has a team in the UK exploring opportunities for property development there, she revealed. The developer has also been expanding into Singapore aggressively. Following two land acquisitions there last year, it recently announced another purchase in Tampines. This year, they are looking to launch RM2 billion worth of projects, with overseas developments accounting for half of the total GDV. Locally, they plan launches for the central region (worth RM630 million), the southern region (RM260 million) and the northern region (RM130 million). There will be only one overseas project the RM1 billion Brookvale Park in Clementi, Singapore.

The launches for the central region include the second block of the first phase of Sunway Velocity TWO (GDV: RM300 million), a high-rise development in Wangsa Maju called Sunway Avila (GDV: RM230 million) and townhouses in Sunway GEOLake Residences in Sunway South Quay (GDV: RM100 million). In the southern region, there will be townhouses and Phase Three of Sunway Citrine Lakehomes in Sunway Iskandar (GDV: RM100 million) as well landed residential units in Sunway Lenang Heights (GDV: RM160 million). In the northern region, the developer will launch the first-of-its-kind hot spring serviced suites called Sunway Onsen Suites (GDV: RM130 million).

Sunway also launched its nationwide Super 5* easy homeownership scheme, seeing the uncertainties in the property market. The scheme allows purchasers to pay RM5,000 to own a unit and the remaining downpayment on a flexi instalment plan. The group will offer eligible buyers 95% guaranteed financing with a special interest rate during the campaign period until June 30. It will also absorb the stamp duty for the transfer of ownership of properties priced above RM1 million. The campaign will also provide aspiring homeowners a free financial health check.

Sunway currently has unbilled sales of RM2.1 billion while its landbank some 54% of which is in Johor, 25% in the Klang Valley, 6% in Penang, 1% in Singapore and the rest in different locations stands at 3,289 acres and has a total GDV of RM56.8 billion. Cheah noted that Sunway's completed unsold units have a GDV of RM400 million to RM500 million and are mainly residences in Johor. They are putting a lot of effort in investment properties there to drive traffic to the township because they need to differentiate the township from others with their offerings, and provide all kinds of property there.

Property investments currently under construction in Sunway Iskandar are the expansion of Sunway International School, Big Box Retail, Big Box Office and Big Box Hotel, worth a total of RM445 million. As the township's pioneering mall, Sunway Citrine Hub has a net lettable area of 71,000 sq ft and is 100% occupied with tenants such as Jaya Grocer, Starbucks, Mr DIY, 7-Eleven, Awesome Brew and Morganfield's.

Sunway Bhd also has disposed of shares in four companies to wholly owned subsidiary Sunway City Sdn Bhd (SunCity) for RM469.25mil as part of a proposed reorganisation exercise.

In a filling with Bursa Malaysia yesterday, the property developer said it had disposed of 2.5 million shares of Sunway Treasury Sdn Bhd for RM17.84mil, two shares in Sunway REIT Holdings Sdn Bhd for RM2, 131.12 million shares in Sunway Medical Centre Sdn Bhd for RM444.38mil, and 20,000 Class A shares in Sunway Lagoon Club Bhd for RM7.03mil. Upon completion of the proposed reorganisation exercise, the four companies will become direct subsidiaries of SunCity. It is also said that the proposed reorganisation exercise is not expected to have any effect on the issued and paid-up share capital of Sunway or Sunway's major shareholders' shareholdings, or any material effect on the earnings, net assets or gearing of Sunway on a consolidated basis.

Sunway Bhd is one of the country's top five mall operators, will also be opening three new shopping malls within the next four years, with an allocation of between RM500 million and RM1 billion for each mall. Sunway Mall and Theme Parks chief executive officer HC Chan said the new malls would be located in Johor, Penang and Perak. Their seventh mall, Sunway Big Box Village in Johor Bahru will be opening in the fourth quarter of this year, while that of Paya Terubong in Penang and Tambun in Ipoh will be ready by 2023. They are also allocating RM500 million for the expansion of the Sunway Carnival Mall in Seberang Prai, Penang, which will be completed in the fourth quarter next year.

A strong growth in 2018 compared with 2017 that were recorded, mainly due to the spending during the festive season. They noticed that more customers are using online payment as it is convenient for them since they don't have to carry so much cash. They normally pay cash for things below RM50 and use debit or credit card to pay for things above that amount. And now, they expect more retailers are venturing into e-commerce to establish an online presence to complement their offline presence, targeting the younger as consumers who will be the first adopters and drivers of e-wallet use.

In line with Bank Negara Malaysia's 10-year roadmap towards a cashless society, Sunway Mall organised a closed door conference, involving leading e-wallet companies such as Boost, FavePay, GrabPay, Maybank QRPay, Touch 'n Go Pay and WeChat Pay and retailers today. To date, close to 35 per cent of retailers in Sunway's malls are using the e-wallet payment system at their outlets, and more retailers are expected to adopt the system to cater to the growing trend in cashless payments. Sunway Mall and Theme Parks chief executive officer HC Chan said the e-wallet sub-sector filled the gap in the payment ecosystem as it is mobile based and it fits into the Malaysian smartphone penetration rate, which is currently at 75.9 per cent as reported by the World Bank. For Sunway Pyramid alone, online payments totalled RM2.5 billion last year, and 60 per cent of customers are paying for their parking using the system (Touch n Go). As for the retailers, the cashless payment system provides an efficient platform for greater cost savings by minimising the cost of handling cash and good accounting and also provides a secure environment that minimises leakages and crime concerns.

Updated: Apr 29, 2023
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Sunway Berhad: Diversified Investment Holdings in Malaysia and Singapore. (2019, Nov 26). Retrieved from https://studymoose.com/sunway-berhad-essay

Sunway Berhad: Diversified Investment Holdings in Malaysia and Singapore essay
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