Sunrise: Profit up +24% yoy on better margins

Sunrise posted 1Q10 net profit of RM37m (+24% yoy), in-line with consensus estimates. Key takeaways from the result: (1) Revenue fell 4% yoy to RM190m, with sales coming from Solaris Dutamas, 10 Mont’Kiara, 11 Mont’Kiara and The Residence projects. (2) Gross profit margin rose to 35.2% in 1Q10 (1Q09: 30.6%) on lower construction cost and building material prices. As a gauge, steel prices during the period declined 58% yoy to USD305/tonne. (3) The construction progress of 10 Mont’Kiara and Solaris Dutamas are on schedule and expected to be completed this FY10. (4) Company recorded RM243m of sales in 1Q09, of which RM159m has been finalised. Total unbilled sales at RM864m provide earnings visibility for the next 12 months.

Share price (+47% YTD) trades at 7x FY10E PE, 51% discount to peers. We expect new sales to be strong due to improving buyers’ sentiment and the low interest rate environment. Construction margin is expected to be improved due to lower construction material prices.

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Sunrise 1Q10 profit +24% yoy to RM37m
For 1Q10 the developer recorded RM243m of bookings and net profit of RM37m; Sunrise expects its property sales to surpass the previous fiscal year.
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Economics
US: ISM manufacturing in Oct rose to 55.7, expanding for the third consecutive month amid a jump in production and employment. Pending home sales also climbed for an eight straight month in Sept by 6.1%.
UK: PMI manufacturing increased to 53.7 in Oct from 49.9 in Sept, the highest since Nov 2007, boosted by a rise in output and new orders.
Euro: PMI manufacturing expanded for the first time in 17 months in Oct, as the index rose to 50.7 from 49.3 in Sept, raising optimism that the region will exit recession soon.