Property firms post stronger 1Q earnings

by S BIRRUNTHA / pic by MUHD AMIN NAHARUL

PROPERTY developers recorded stronger earnings and revenues in the first quarter ended March 31, 2021 (1Q21), despite uncertainties caused by the Covid-19 pandemic.

Sime Darby Property Bhd’s (SD Property) net profit increased to RM60.61 million year-on-year (YoY) in 1Q21 from RM2.72 million in the same quarter last year, underpinned by the recovery in its property development segment.

Revenue jumped 23.7% to RM589.49 million from RM476.74 million a year earlier, the group said in a Bursa Malaysia filing recently.

The group also achieved sales of RM630.2 million during the quarter, while unbilled sales and total bookings stood at RM1.7 billion and RM800 million respectively.

Its property segment for the quarter registered a significant improvement in performance by RM96.4 million or more than a tenfold increase in contribution, compared to the previous corresponding period.

Commenting on the stellar performance during the 1Q21, SD Property group MD Datuk Azmir Merican Azmi Merican said robust digital marketing efforts have led to healthy take-up rates of more than 90% for new launches during the quarter.

He added that the group is on track to achieve its 2021 sales target of RM2.4 billion.

Nevertheless, Maybank Investment Bank Bhd has maintained its earnings forecasts and ‘Hold’ rating on SD Property with an unchanged target price of 69 sen.

The research house noted that the total nationwide lockdown from June 1-14 would likely affect buying interest in property stocks.

Similarly, Mah Sing Group Bhd saw its net profit jumped by 40.30% YoY to RM40.28 million for the 1Q21 from RM28.71 million due to a higher contribution from its property development segment.

Its quarterly revenue rose by 11.37% to RM413.32 million, compared to RM371.13 million, mainly driven by progressive revenue recognition from ongoing construction progress for our existing projects coupled with the recognition of cost savings from the finalisation of certain construction contracts.

It also achieved property sales of RM650.5 million for the first five months of 2021 as at the end of May 2021, while locking in RM400 million for 1Q21.

Mah Sing noted that this was driven by the strong demand for affordable product offerings in strategic locations.

Coupled with the continuous effort of the group in adopting digital marketing, the group said it is well-positioned to meet its 2021 sales target of RM1.6 billion.

CGS-CIMB Securities Sdn Bhd opined that Mah Sing’s earnings impact could be minimal compared to the first Movement Control Order (MCO 1.0), as construction sites are able to continue with a 60% on-site capacity during the two-week nationwide lockdown.

It added that the group will use digital platforms for sales and marketing, despite its sales galleries being closed during the lockdown.

Sunway Bhd recorded property sales of RM1.16 billion in 1Q21, which was higher than the sales of RM357 million recorded back in 4Q20.

The group said the robust sales were mainly driven by projects in Singapore, adding that the stronger sales in 1Q21 indicate its full-year sales are on track to be above management’s full-year target of RM1.6 billion.

LBS Bina Group Bhd’s net profit doubled to RM25.15 million in 1Q21 compared to RM9.34 million a year ago, while its revenue surged by 35% to RM402.55 million compared to RM299.27 million previously.

Its property development segment posted a 37% jump in pretax profit to RM54.6 million on the back of higher revenue by 86.3% to RM390.4 million.

The group attributed the stellar performance of its top line and bottom line to positive take-up rates at its projects, as well as steady construction progress, supported by the relaxation of the MCO during the period.

SP Setia Bhd also posted a stronger sales performance of RM1.19 billion in 1Q21, as its local projects contributed about 78% of the sales and its international projects contributed about 22%, whereby the demand for residential properties in Singapore gained traction recently.

The group also recorded a revenue of RM1.05 billion and a pretax profit of RM142.4 million for the quarter.

UEM Sunrise Bhd recorded a better revenue of RM252.69 million in 1Q21 from RM195.85 million previously, underpinned by higher progress billings and construction progress from its local developments.

The group’s net loss for the quarter has narrowed to RM4.32 million from RM22.15 million a year ago due to the higher revenue and foreign-exchange gain.

The improvements in the share of results from associates and joint ventures contributed by developments in Horizon Hills and Forest Heights in Seremban, Negri Sembilan, has also helped boost the group’s performance.

Moving forward, UEM Sunrise said its earnings visibility is backed by unbilled sales of RM1.9 billion (as of March 31), which will be substantially recognised over the next 18 to 36 months, depending on projects’ progress completion.

It added that the group remains financially sound with a cash balance of RM1.5 billion, albeit a slight increase in net gearing of 0.44 time as at March 31, 2021, partly due to additional borrowings raised in the quarter.