ferrets stock to watch: sunland group limited

Ferrets Stock to Watch: SUNLAND GROUP LIMITED
08:54, Wednesday, 27 September 2006

QLD PROPERTY DEVELOPER TRIES THE BIG TIME IN DUBAI

Sydney - Wednesday - September 27: (RWE Aust Business News)
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OVERVIEW
********

The Sunland Group (ASX:SDG) has take a big step this year in
deciding to manage and operate a massive $4 billion project in a master
planned community with about 10,000 dwellings, three hotels, over 20 high
and several medium rise development villas and townhouses.

Directors have indicated they are pinning their future growth
through overseas expansion.

The company first told shareholders about the Dubai plans in
May and disclosed the master-planned community will also accommodate a
central commercial and retail precinct around a man-made harbour with
two islands and an international golf course.

The agreement was with Al Murjan Real Estate (LLC), a company
incorporated in the Emirate of Sharjah.

Under the deal, Emirates Sunland Group has the responsibility to
appoint consultants and contractors to develop the master-planned
community, on the foreshore of Ummal Quwain.

The province of Ummal Quwain neighbours Sharjah and is about 60
kms north of Dubai.

Yesterday the Sunland Group announced its 50 per cent-owned
Emirates Sunland had executed a development agreement for a 20-storey
mixed-use commercial building comprising retail, offices and studio
apartments in Business Bay - Dubai.

Under the agreement Emirates Sunland has a two-thirds interest
with private investors holding one third.

All parties have contributed equity in proportion to their
shareholding in the development.

The land was bought from Dubai Properties for $25 million with
the project valued at $125 million.

It will incorporate an 18,000 sqm office precinct, 4,000 sqm
studio apartments and 1,800 sqm retail.

SHARE PRICE MOVEMENTS
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Shares of Sunland Group yesterday rose 3c to $2.33. Rolling high
for the year was $2.48 and low $1.42. Dividend is 12.5c to yield 5.36
per cent. Earnings per share is 28.9c while the p/e ratio is a modest
8.03. The company has 289.6 million shares on issue with a market cap of
$666.17 million.

In August, the Sunland Group reported a net profit to $72.3
million for the year to June 30, which exceeded the original profit
guidance of $70 million.

Under new AIFRS accounting standards the result is an increase
of 132 per cent on the previous year.

Diluted earnings per share were 28.5c per share, with Net
Tangible Assets at $1.11.

Revenue for the year was 144 per cent above the previous year,
increasing to $488.6 million.

Directors have declared a final 6.25c dividend for the year to be
paid on September 29, bringing the total dividend paid for 2006 to
12.5c fully franked.

Sunland's general manager Anne Jamieson, referring to the profit
guidance for 2007, says despite softer market conditions in Australia,
the board of Sunland believes that the Group will, in the 2007 financial
year, exceed the 2006 year result of $72.3m, to produce profit growth in
excess of 10 per cent, reinforcing the profit guidance of $80 million.

Directors expect that income from the overseas project
management activities which will start to flow through from 2007, with
2009 seeing a substantial increase in profit derived from the development
income on key projects including D1 and Palazzo Versace.

The board and management believe that within the next three
years, the Group will derive an increasing proportion of its earnings
from overseas projects, including the global rollout of Palazzo Versace.

Directors intend to maintain the current dividend payment policy
and the continuance of the dividend reinvestment plan has also been
approved.

Sunland's solid profit result was achieved during a year where
two major high rises settled.

Firstly, the iconic Q1 in August last year, followed by Yve in
April.

Both buildings were recognised by the Royal Institute of
Architects in their respective states, with Yve awarded the highest
recognition in architectural design winning the 2006 Victorian
Architectural Medal and Harold-Desdrowe-Annear Medal.

The Group's Australian operations further cemented its
geographic diversification with the commencement of construction on
projects in Sydney and the strengthened performance of the land
subdivisions in Queensland and Victoria.

In particular Bushland Beach (Townsville) and Arbour on the Park
(Melbourne) continued to outperform budget.

Several acquisitions were made during the year, with over 700
new products added to the Group's pipeline in housing and land.

Sunkids (the Group's child care division) opened its first
centre in October and now has 10 centres operational, with a further
eight under construction.

The division is scheduled to add 20 centres in 2007 and to
continue that expansion on an ongoing basis.

The Group's 49 per cent stake in the tourism and leisure arm -
Sunleisure - which operates the management of Lumiere, Oasis Resort
Cairns and Legends, saw the addition of Q1 in October, followed by the Q1
Observation Deck in December and the retail precinct of Circle on Cavill
in June this year.

By December, the management rights of Circle on Cavill's south
tower and Avalon will be added, and the north tower of Circle in April
next year, bringing the total number of keys under management to in
excess of 2,200.

The core of the Group's profit was derived from the high rise
and land division contributing a significant 75 per cent and 22 per cent
respectively.

Projects including Q1, Yve, Bushland Beach, Clover Hill and
Arbour were strong contributors.

It is expected that, in the coming year, the high rise division
will continue to contribute strongly to the profit with the completion
of Circle on Cavill and Avalon during the year.

The land subdivisions are also expected to perform well.

The addition of CPH as a substantial shareholder in the Group in
July, and the subsequent appointment of James Packer to the board will
add valuable expertise and credentials to the Group as it positions
itself more strongly on a global scale.

BACKGROUND
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Sunland Group was listed on the Australian Stock Exchange in
February 1995.

It is a property development and management company operating
in urban development, residential housing, multi-storey development,
hotel management and child care centres.

Sunland currently has operations in the Gold Coast, northern
NSW, Victoria, Brisbane, and Sydney and now in Dubai.

In early 2006, Emirates Investments Group and Sunland formed a
joint venture company in UAE, and opened the office of Emirates Sunland
Group.

The joint venture will develop Palazzo Versace and D1 in Dubai,
along with the project management of a $4bn master planned community in
Umm Al Quwain, UAE.

Palazzo Versace Dubai and D1 will be built on land allocated by
Dubai Properties as part of Culture Village on the Dubai Creek.

Construction is scheduled to commence in early 2007, with
completion in 2009.

The Group expects a strong increase in business opportunities
emanating from its overseas division in the next five years, and will
contribute a substantial part of the earnings while the Australian
market remains soft.

A number of the Sunland Executive design and management team
have relocated to Dubai to provide the required expertise for the major
growth anticipated in the region.

ENDS