Sime Darby Property targets to double recurring income contribution

We will expand further into industrial and logistic developments to increase recurring income, says acting group CEO

By FARA AISYAH / Pic By XME Business Park Facebook

SIME Darby Property Bhd aims to double the recurring income contribution to the company’s earnings in four years.

The recurring income segment has contributed about 3% to 4% to the developer’s earnings in the financial year ended Dec 31, 2019.

“The target is to double the recurring income contribution to earnings by 8% in the next four years,” Sime Darby Property acting group CEO Datuk Wan Hashimi Albakri Wan Ahmad Amin Jaffri said in Kuala Lumpur yesterday.

In November last year, Sime Darby Property together with Mitsui & Co Ltd and Mitsubishi Estate Co Ltd have unveiled the first two tenants for build-to-suit industrial facilities at Bandar Bukit Raja Industrial Gateway in Klang, Selangor.

The tenants for the RM500 million development are Leschaco (M) Sdn Bhd and Senheng Electric (KL) Sdn Bhd.

The construction progress for Leschaco’s unit is 9.15% as at end-January 2020, while Senheng’s unit is 14.41%.

In February, Sime Darby Property has also introduced the XME Business Park which sprawls over 69.72 acres (28.2ha) of prime, freehold land in Nilai Impian, Negri Sembilan.

The business park will be the first managed industrial park in the state, with a gross development value of RM520 million.

These industrial properties are expected to contribute to the group’s recurring income segment in the future.

“We will expand further into industrial and logistic developments to increase recurring income,” Wan Hashimi Albakri said.

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 to RM888.93 million from RM788.81 million in 4Q18.

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.

Wan Hashimi Albakri said Battersea’s residential units have seen a spike in sales following the Brexit certainty.

“Things have turned around for the Battersea development after Brexit certainty. Sales shot up, especially on residential units, but there are still challenges in the UK market.

“Battersea development is progressing, although slightly behind the original schedule,” he said.

Wan Hashimi Albakri added that the developer is working on Phases 1, 2 and 3 of the Battersea development, but Phases 4 to 7 are going to be kept for a while.