Dear Stakeholders,
It is a privilege for me to be addressing you for the first time since assuming the role of Chairman of the Board in July 2023. Before anything else, I would like to take the opportunity to thank Dato’ Noorazman Abd Aziz, my predecessor in this role, and Encik Effizal Faiz Zulkifly who resigned as Non-Independent NonExecutive Director, for all their contributions to UEM Sunrise.
I would like to extend a warm welcome to Mr. Reagan Chan Chung Cheng as a Non-Independent Non-Executive Director, and Dato’ Sr. Azmar Talib as Independent Non-Executive Director, for being part of our reputable Board.
As we move forward, I would like to begin by taking a somewhat different approach to the Chairman’s message. While the message is typically intended to give shareholders a general overview of the company’s performance in the past year, as well as highlight some achievements and challenges, I would like to go down a path less travelled. I would like to give a more holistic perspective to all shareholders – majority or minority – on the current context in which UEM Sunrise stands, and the most material issues that we presently face.
THE PRESENT DAY CONTEXT
To get to the present day, we should also understand where we came from. UEM Sunrise was born out of the merger of UEM Land – which itself was born out of the aftereffects of the Asian Financial Crisis – and Sunrise, which were known for township developments and high-rise projects respectively. The intention was to build on the Sunrise brand and expertise in developing high-rise buildings to unlock the value from UEM Land’s massive landbank in Iskandar Malaysia, Johor. The merger created Malaysia’s largest property company with more than RM5 billion in assets, and a market capitalisation of approximately RM10.5 billion. UEM Sunrise was, of course, backed by Khazanah Nasional, Malaysia’s sovereign fund. The future was bright, and indeed, in 2013, we hit our highest ever market capitalisation at RM15.9 billion.
Fast forward about a decade or so after our market capitalisation peaked in May 2013, we have yet to fulfil our potential as a company. When I came into the role as Chairman, our market capitalisation stood at RM1.4 billion (RM0.27 per share). We have seen some improvements since then, with the market capitalisation at RM5.9 billion (approximately RM1.16 per share) as at 22 March 2024. Yet, this figure still trails our book value and our Real Net Asset Value. Furthermore, over the past decade, this industry has faced multiple headwinds from various market conditions. This is true of property developers generally and is also true of UEM Sunrise. Our Return on Equity (ROE) has languished in the low single digits, between 2% and 4% from 2015 to 2019, and since 2020 to present, ROE has been even lower. In addition, as we have come to realise, the 2011 merger is one of scope – combining UEM Land’s massive landbank in Iskandar Malaysia with Sunrise’s expertise in high rise – not necessarily scale; what merger integration synergies have we realised from the different skillsets in township developments and high-rise projects?
