SP Setia lowers 2015 sales target amid uncertain environment

KUALA LUMPUR: SP Setia Bhd, whose net profit for the first half-year to April 30 nearly doubled to RM328.5mil from a year earlier, expects to continue to do well in the second half thanks to its massive unbilled sales of RM11bil.

However, the uncertainty around the UK housing market - where its Battersea Power Station joint-venture project is located - as well as tighter lending from banks have led the company to revise downward its sales target for the 2015 financial year from RM4.6bil to RM4.0bil, it told Bursa Malaysia in its latest quarterly report.

“While sales from the Malaysian projects registered an improvement in the second quarter, its international projects posted weaker sales largely due to the uncertainty surrounding the United Kingdom housing market prior to the general election having an impact on sales in Battersea Power Station,” SP Setia said.

“On the local front, the group continues to face challenges such as tighter lending from banks as a result of the property cooling measures introduced by Bank Negara Malaysia and weak buyer sentiment.”

Total group sales for the first seven months of its current financial year amounted to RM2.0bil, it noted.

Acting president and CEO Datuk Khor Chap Jen said in a press statement: “I am glad to note amidst the current challenging market, SP Setia’s sales performed satisfactorily thanks to our loyal customers who continue to believe in the brand.

“We have also adapted our product launches to mid-priced range products, particularly in the Klang Valley, and the strategy is proving fruitful as project launches in Setia Alam, Setia EcoHill and Setia Eco Glades continue to be major contributor to sales due to its strategic locations and good infrastructure. We are confident that with the right products and the strategic location of our remaining landbank, we will continue to witness strong demand for our projects in the current financial year.”

For the second quarter (Q2) ended April 30, 2015, SP Setia’s net profit tripled to RM227.2mil from RM74.3mil a year earlier on 71.2% higher revenue of RM1.63bil.

The company attributed this performance partly to profit recognition from the development of its strong sales pipeline achieved to date and the timely staged handovers of its first residential tower under the Fulton Lane project in Melbourne, which has been accounted for based on the completion method.

The group is expected to hand over the second residential tower in Fulton Lane in the second half of the financial year.

S P Setia’s board has recommended an interim single tier dividend of 4 sen per share in respect of the financial year ending Oct 31, 2015, which is consistent with prior year. The board has also decided that the dividend reinvestment plan will apply to this interim dividend.

The company, which is a subsidiary of Permodalan Nasional Bhd, also announced on Monday that it would change its financial year end. The next audited financial statements of the company will be for a period of 14 months - from Nov 1, 2014 to Dec 31, 2015.

SP Setia closed 5 sen higher at RM3.38 on Monday.