HOC contributes half of Sime Darby Property’s RM1.4b sales in 1H19

Sime Darby Property is on track to achieve its sales target of RM2.3b for the year, according to its chief marketing and sales officer


THE Home Ownership Campaign (HOC) has contributed to half of Sime Darby Property Bhd’s RM1.4 billion sales in the first half of 2019 (1H19).

Sime Darby Property chief marketing and sales officer Gerard Yuen said most of the developer’s projects are registered under the HOC, including KL East’s The Ridge and Serini Melawati.

“(Moreover,) 50% of our total sales in 1H19 are from the HOC at a value of RM700 million.

“We did see a spike in sign-ups at the end of June, before the government announced the extension of the HOC.”

“After that, the take-up rates turned to normal as buyers have six more months to buy. We expect to see a spike in take-ups again at the end of the year,” he said at the group’s second quarter (2Q) financial results announcement in Kuala Lumpur (KL) yesterday.

Yuen added that Sime Darby Property is on track to achieve its sales target of RM2.3 billion for the year.

He said the sales achievement in 1H19 was supported by two marketing campaigns, namely Primetime 8 and Pop Raya.

“A rule of thumb in the industry is that companies will use 2% of their sales for marketing purposes. But for our campaigns, we are able to use only 1% of our total sales.

“We have the economy of scale, so we are able to halve the marketing expenditure so it is not eating up our margin,” he said further.

Sime Darby Property’s net profit for the 2Q improved more than fourfold to RM205.26 million from RM46.57 million in the previous year’s corresponding period.

Its quarterly revenue also rose 40.26% year-on-year to RM865.9 million from RM617.37 million in the same period last year.

Sime Darby Property acting group CEO Datuk Wan Hashimi Albakri Wan Ahmad Amin Jaffri said the developer will continue to provide homes at the right price and location.

“The property market is soft; I don’t think it is going to get any better in the next few years. The demand is there, but there are still challenges of loan financing for the purchasers.

“A lot of things are happening around the world which would affect our local economy, so we have to wait and see what is going to happen in the global economy. We are expecting a moderate market in 2H19,” he said.

He said the firm believes there is demand for innovative products in the market.

The group targets to launch new properties from the affordable collection (below RM500,000 per unit) and mid-range priced products (RM500,000 to RM800,000 per unit) via the ongoing Spotlight 8 Campaign which runs for eight consecutive weeks from July 13 to Sept 28, 2019.

The developer is also committed to its SHIFT20 transformation plan to expand into the key growth sector of industrial and logistics development to increase its profit and recurring income base in the future.

Moving forward, Wan Hashimi Albakri said the company will continue with its asset monetisation, with the aim of divesting its non-core lands in Kedah measuring approximately 526.09ha in the next two years.

“It’s not easy to find a buyer who is willing to buy all the 529.09ha (parcels) of land at once. The land is also scattered in several places with one big piece measuring about 404.69ha, and it’s not easy to find a buyer who can afford that.

“There must be monetisation (activities) for our non-core lands, as they are not giving us any profit if we keep holding them. We might as well sell (them), take the money and invest in the Klang Valley,” he said.

Among other asset monetisation initiatives for the current financial year to date is the disposal of 121.41ha of industrial land in Kedah for RM88.9 million, as well as the disposal of its hospitality asset overseas — namely the Darby Park Executive Suites and an apartment unit in The Orion, Singapore — with a total value of RM290.9 million.