SP Setia loses RM142m in 2Q

The property giant is banking on the govt’s stimulus packages momentum post-pandemic


SP SETIA Bhd plans to focus on clearing completed inventories while riding on the momentum of increased real estate activity under the government’s economic stimulus packages, after taking a hit to earnings due to the Covid-19 pandemic.

The property development company fell into the red in its second quarter ended June 30, 2020 (2Q20), with a net loss of RM141.55 million against a net profit of RM114.07 million last year.

“In view of the unprecedented challenges of the Covid-19 pandemic, the group had resolved to aggressively reprice the inventories at Setia Sky 88 project in Johor Baru and Setia Sky Vista project in Penang, which had been completed for some time, to expedite its clearance and to conserve cashflow.

“As a result, the group had to account for an unprecedented impairment of completed inventories of RM145.9 million in 2Q20,” it told Bursa Malaysia yesterday.

Site progress of all projects also came to a standstill during the Movement Control Order, which significantly impeded revenue during the quarter.

SP Setia’s revenue plummeted 75.2% to RM331.33 million in 2Q20 from RM1.34 billion a year ago.

For the first half ended June 30, 2020, the developer secured sales of RM875 million, of which local projects contributed 80% or RM702 million and international projects contributed the remaining RM173 million.

Local sales were mainly derived from the central region with RM502 million, while the southern and northern regions brought in RM127 million and RM73 million respectively.

Some RM179 million worth of inventories were monetised during this period, the firm said.

“In addition to the sales secured, as at July 2020, the group had also secured bookings of RM1.42 billion. The main focus will now be on the swift conversion of these bookings into sales,” its president and CEO Datuk Khor Chap Jen (picture) said in a separate statement.

The group also has unbilled sales of RM9.68 billion, which will tide it over for the next two years, and has implemented several cost-rationalisation initiatives for better operational efficiency.

Besides focusing on clearing completed inventories, it will remain prudent with selective new launches and concentrate on the mid-range landed units in established townships to cater for the demand of owner-occupiers.

As of end-June, the developer has 48 ongoing projects with a remaining landbank of 8,711 acres (3,525ha) and gross development value of RM139.4 billion.

Shares of SP Setia closed 0.64% higher at 79 sen yesterday, for a market capitalisation of RM3.18 billion.