SP Setia targets to launch properties worth RM6.8b

The group has set a sales target of RM5.7b for FY19, says its president


SP SETIA Bhd plans to launch RM6.8 billion worth of properties with a 10% sales growth target for its financial year 2019 (FY19) as the industry is anticipated to recover in coming months.

President and CEO Datuk Khor Chap Jen said the group has set a sales target of RM5.65 billion for FY19, with approximately 89% of it to be derived from local projects.

“This represents a sales growth of about 10% and will further solidify SP Setia’s position as the leading property developer in Malaysia,” Khor told reporters at the company’s media briefing in Kuala Lumpur (KL) yesterday.

He is also optimistic that the country’s property market is set to gradually improve as it had “bottomed out” last year.

For FY18, local projects contributed RM4.12 billion or some 80% of sales, while international projects generated RM1 billion or approximately 20% of the total figure, surpassing the firm’s RM5 billion sales target.

Additionally, SP Setia said local launches will be concentrated in the central region with planned launches of RM4.98 billion.

“This includes new projects from I&P Group Sdn Bhd’s landbanks such as Setia Alaman (as an extension of Setia Alam), Set ia Mayuri in Semenyih, Setia Tropicale in Salak Tinggi and newly acquired landbanks in Cyberjaya known as Setia Safiro,” Khor added.

SP Setia will also continue to launch new phases in the group’s established developments such as Setia Alam, Bandar Kinrara, KL Eco City and Setia Ecohill 2, as well as rebranded projects of Setia Alamsari, Alam Sutera and Kota Bayuemas in the central region.

According to Khor, launches from the southern region is planned at RM1.17 billion — largely from Setia Tropika, Bukit Indah, Setia Indah, Setia Eco Gardens and Taman Industri Jaya.

As for the northern region, he said the planned launches totalled RM349.3 million, while the planned launches from Aeropod in the East Malaysia region amounted to RM163.5 million.

Underpinned by an unbilled sales pipeline of RM12.32 billion, the group has 45 ongoing projects and effective remaining landbanks of 9,516 acres (3,850.99ha) with a gross development value of RM149.7 billion as at Dec 31, 2018.

SP Setia’s net profit for the fourth quarter of 2018 (4Q18) declined 32.47% to RM101.55 million from RM276.03 million a year ago due to lower contributions from the property development, construction and other operations segment.

Revenue for the quarter fell 23.41% to RM1.02 billion from RM1.33 billion a year ago.

In a filing to Bursa Malaysia, the group said the lower profit and revenue were due to higher volume of development phases completed and handed over in 4Q17, and profit recognition on the completion of Phase 1 of the Battersea Power Station.

“Projects in the UK and Australia have to adhere to the completion method of accounting for revenue recognition, hence, the completion of such projects will normally have material upside impact on the group’s profit,” it said.

For the full year, SP Setia posted a cumulative FY18 net profit of RM670.96 million, a 32.48% drop from RM993.7 million a year ago, while revenue fell 16.19% to RM3.59 billion from RM4.29 billion.

The group declared a final dividend of 4.55 sen per share, bringing the total dividend payout to 8.55 sen, representing a payout ratio of 70.1% for FY18.

Concerning the Islamic Redeemable Convertible Preference Shares A and Islamic Redeemable Convertible Preference Shares B, the group also declared a preferential dividend of 6.49% per annum and 5.93% per annum respectively for the financial period from July 1, 2018 till Dec 31, 2018.

On Dec 14, 2018, the group achieved a significant milestone with Battersea Phase 2 Holding Co Ltd (BP2H), signing a sale and purchase agreement with PNB-Kwasa International 2 Ltd — a joint-venture company formed by Permodalan Nasional Bhd (PNB) and the Employees Provident Fund Board — to undertake the acquisition of commercial assets in Phase 2 of the Battersea Power Station development for a base consideration of £1.58 billion (RM8.53 billion).

As SP Setia owns a 40% stake in BP2H, it will be able to recognise £630 million sales from this transaction. “If this sale is taken into consideration, it would bump up SP Setia’s total sales to RM8.45 billion for FY18,” Khor said.

On updates for the entire project, Khor said Phase 2 and Phase 3A are on track for completion by 2020 and will be open to the public by 2021.

“Phase 3B can only start once the tube station, which is a part of Phase 2, is completed. Then, we will get the land to commence the last and final stage,” he said.