Sime Darby Property’s FY19 sales target exceeded by 35% for RM598.5m net profit

Company expects the property market to remain soft in 2020 due to the prevailing overhang situation and expiry of the Home Ownership Campaign


SIME Darby Property Bhd returned to profit in the final quarter of last year compared to a net loss of RM347.5 million in the same period of 2018, aided by absence of huge impairments, higher revenue and lower costs of sales.

In the October through December 2018 period, the country’s leading property developer was impacted by inventory impairments, negative contribution from its Battersea Power Station project and higher tax provision.

For the fourth quarter ended Dec 31, 2019 (4Q19), Sime Darby Property rebounded with a net profit of RM102.96 million, while earnings per share reversed to 1.5 sen for the period compared to a 5.1 sen loss per share in 4Q18.

Quarterly revenue also increased 12.69% year-on-year (YoY) to RM888.93 million from RM788.81 million in 4Q18.

For the full year (FY19), Sime Darby Property recorded a net profit of RM598.53 million, compared to a RM238.46 million net loss recorded in 2018.

The group’s annual revenue rose 29.8% YoY to RM3.18 billion from RM2.45 billion in FY18. Its property development segment remained the key driver, registering a 597.6% or RM357.1 million jump in contribution compared to the corres- ponding period of 2018.

The year’s results were further enhanced with gains on compulsory acquisition and non-strategic land sales totalling RM138.2 million.

Excluding these one-offs, a 33.2% increase in the current year performance was contributed mainly by higher sales and development activities in Denai Alam, Bukit Jelutong, Nilai Utama, Bandar Bukit Raja, Serenia City and Putra Heights township, Kuala Lumpur Golf & Country Club Resort and Cantara Residences.

The property investment segment registered a lower profit of RM5 million compared to RM54.4 million in FY18, which saw higher contribution from concession arrangement and commencement of tenancy of an investment property.

The property investment segment’s profit on FY19 was impacted by an impairment of receivable of RM6.7 million.

The group’s share in Sime Darby CapitaLand (Melawati Mall) Sdn Bhd has improved to a profitable position from a loss of RM1.2 million a year ago, mainly due to a higher occupancy rate of 86% compared to the previous year of 81%.

Sime Darby Property exceeded its sales target for 2019, achieving total sales of RM3.1 billion for the year which is 35% higher than its target of RM2.3 billion.

The developer launched 2,917 units with a combined gross development value (GDV) of RM2.3 billion in 2019. Its total unbilled sales stood at RM1.6 billion as at Dec 31, 2019.

Sime Darby Property expects the property market to remain soft in 2020 due to the prevailing overhang situation and expiry of the Home Ownership Campaign at the end of last year.

“The group will focus on growing its core development business despite the challenges.

“It will continue to offer properties within the affordable and mid-range price points in strategic locations,” it said in a statement yesterday.

The group added that it will continue to monetise low-yielding assets to unlock value and channel the capital into business opportunities with better returns.

Sime Darby Property is also expected to expand further into industrial and logistic developments to increase recurring income.

The board has declared a single interim dividend of two sen to be paid on April 20, 2020.