SP Setia 1Q19 profit dips 14%, 
but its revenue up by 32%

Revenue for 1Q19 is mainly derived from the supply of ready-mix concrete, and the construction of apartments in Bangsar

By SHAHEERA AZNAM SHAH / Pic By TMR

SP Setia Bhd’s net profit dropped 14% year-on-year (YoY) in its first quarter ended March 31, 2019 (1Q19), to RM52.82 million from RM61.48 million, as a result of foreign- exchange (forex) losses through its loan facilities.

In an exchange filing yesterday, its revenue for the January to March period rose 31.9% to RM864.9 million from RM655.5 million a year ago, contributed by the strong take-up rates in the 4Q18 from its township development in the central and southern region.

SP Setia’s revenue for its property development rose 34.16% to RM797.5 million from RM594.48 million a year ago, while its profit before tax increased by 45% YoY to RM123.44 million from RM85.1 million.

For its construction segment, the developer’s revenue fell 3.7% YoY from RM24.53 million to RM23.62 million, while its loss before tax widened to RM970,000 from RM208,000 a year ago.

“Revenue for the current quarter is mainly derived from the supply of ready-mix concrete, as well as the construction of apartments in Bangsar.

“The construction profit for the above projects is not significant to the group as they are carried out as part of land and development right exchange arrangement,” it said.

In a separate statement, the developer said it has launched approximately RM339 million in gross development value which are mainly landed properties.

“Despite the lacklustre property market, there is still a strong demand for landed residential properties from owner occupiers looking to settle down in established township,” it said.

It said the group has planned a total of RM6.47 billion of property launches for the remaining of 2019, of which RM4.65 million will be concentrated in the Klang Valley, and RM1.12 billion in Johor.

“The major planned launches are in Setia Alam, Bandar Kinrara and Alam Impian for the Klang Valley, while Setia Tropika, Bukit Indah Johor, Setia Eco Gardens are planned for Johor,” it said.

Its president and CEO Datuk Khor Chap Jen (picture) said the developer has been monitoring the property market, particularly the landed segment, to better position the arrangement of its product launches.

“The group is monitoring the property market closely with the pipeline of diversified products mainly concentrated on landed residential properties.

“We will roll out more launches the moment the property market picks up,” he said in the statement.

For the Battersea development, which SP Setia holds 40% stakes, Khor said the deal includes an agreed price adjustment mechanism intended for the project to benefit from its income growth over a five-year period.

“BPS (Battersea Phase 2 Holding Co Ltd) deal structure also includes an agreed price adjustment mechanism applicable at the end of the fifth year following the practical completion of the Battersea Phase 2 commercial assets, which is intended to benefit from the assets’ potential strong income growth over the five-year period post practical completion,” he said.

BPS had completed the sale of the commercial assets in Phase 2 on March 14, 2019, for a base consideration of £1.58 billion (RM8.53 billion).

BPS had received an initial payment of £676.1 million, which is the base consideration attributable to the percentage of completion to date.