SD Property’s net profit surges on resumed projects

by SHAHEERA AZNAM SHAH

Sime Darby Property Bhd (SD Property)’s net profit in its first quarter ended March (1Q21) surged to RM60.61 million from RM2.72 million in the same quarter last year, which the group attributed to the recovery in the property development segment amid the loosened Movement Control Order (MCO).

Its quarterly revenue also rose 23.65% to RM589.49 million from RM76.74 million made a year ago. Earnings per share rose to 9 sen from none in 1Q20.

“The improved financial performance was mainly attributable to the recovery in property development segment as compared to the previous year where the MCO was first implemented by the government to curb the spread of the Covid-19 pandemic,” it said in a bourse filing.

Its property development segment saw the most significant contribution with RM104.41 million of operational profit against RM7.99 million a year ago, mainly due to the higher sales and development activities in the City of Elmina, Serenia City, Serini, The Ridge and Senada.

The property developer said its operating expenses for the segment were also lower than the corresponding period last year as a result of prudent cost management.

“In the previous year, the development activities and the registration of new sales were affected by the implementation of MCO.

“In addition, the lower gross profit margin was recorded in the corresponding period, mainly due to the minimal profit derived from the sale of land at RM118.7 million in Gold Coast, Australia,” it said.

With the opening of KL East Mall in late November 2020, SD Property’s investment and asset management segment saw an increase in revenue to RM22.4 million compared to RM17.4 million last year.

However, the segment registered a loss of RM2.6 million compared to a profit of RM0.5 million last year due to the higher expenditure incurred in respect of the KL East Mall in line with the increase in activities with the mall opening.

“The group recognised a higher share of losses from a joint venture and lower rental revenue from other investment properties as a consequence of lower occupancy rate and ancillary revenue, coupled with the rent concessions given to tenants,” it added.

The leisure segment registered a revenue of RM14.1 million compared to RM18.5 million made last year as the contribution from events and functions remains low following the Covid-19 pandemic outbreak and temporary closure of businesses as a result of the MCO.

Despite the lower revenue, the segment recorded an improved loss to RM3.1 million from RM5.4 million last year, attributed to the lower operating losses upon consolidation of its operation with a focus on manpower optimisation in the
current quarter.

With the current imposition of the movement restriction, the property developer remained cautious with its effect on the property industry while being optimistic about the group’s ability to chart a better financial performance for its financial year 2021 (FY21).

“While challenges related to Covid-19 are expected to prevail in FY21 with the reimposition of the MCO in the country, we are cautiously optimistic of future growth backed by our improved financial performance in the first quarter of FY21.

“Market recovery will be heavily dependent on containment measures undertaken and the success of the vaccination programme in the country.

“The group’s financial resilience is underpinned by unbilled sales of RM1.7 billion and total bookings of RM0.8 billion secured as at March 31, 2021 while our net gearing ratio remains moderate at below 0.30 times,” it said.