SP Setia confident of RM4bil sales target despite economy slowdown

Signed deal: Khor (3rd from right) exchanging documents with CIMB head of corporate banking Lee Heng Keng after the signing ceremony. With them are AmBank executive vice-president, wholesale banking Sim How Chuan (left), Maybank MD of corporate banking Caroline Teoh, Setia Federal Hill director Mohamad Abdullah (2nd from right) and Industrial and Commercial Bank of China (Malaysia) deputy CEO Wang Chunhai (right).

KUALA LUMPUR: Property developer SP Setia Bhd remains sure of hitting its sales target of RM4bil for the financial year in spite of the slowdown in the economy.

“As it is, unbilled sales stand at RM9.5bil as many of our projects are sold out, but because the buildings have yet to be completed, the sales are not recognised as yet,” acting president and chief executive officer Datuk Khor Chap Jen said.

He said this at a press conference after inking an RM1.07bil syndicated financing facilities agreement for its associate company Setia Federal Hill Sdn Bhd with several banks.

SP Setia and the banks – CIMB Investment Bank Bhd, Malayan Banking Bhd, AmInvest Bank Bhd and Industrial and Commercial Bank of China (Malaysia) Bhd – were in for a land swap development transaction under the Government’s Public Private Partnership programme to develop the National Institute of Health (1N1H), a new integrated health and research institute.

Khor, who is also the latter’s chairman, said the group’s overseas projects were not slowing down, but instead, it was poised to receive a 40% to 50% revenue contribution next year as about 70% of it came from local developments this year.

Currently, SP Setia’s total landbank stands at about 4,200 acres, with an estimated gross development value of RM70bil.

Close to 3,500 acres are located in Malaysia, most of which are in the Klang Valley, SP Setia acting chief financial officer Choy Kah Yew said.

Overseas, the company has projects in Vietnam, Australia, Singapore and the United Kingdom.

“Next year, we plan on focusing our overseas efforts on Australia and the UK,” Khor said.

“Locally, we are targeting to build to meet demand. As it is every citizen’s dream to own a home regardless of the state of the economy, we will concentrate on the mid-rise, landed and affordable homes segment.”

Prices for landed homes in Setia Alam range between RM700,000 and RM800,000 and in Semenyih about RM500,000 to RM600,000, while affordable apartments in the Klang Valley and Penang are priced at between RM250,000 and RM300,000, and RM500,000 and RM600,000, respectively, Khor said.

Meanwhile, SP Setia’s 41-acre 1N1H in Setia Alam will comprise office buildings, health management institutions, a medical research centre, a facilities block, a kindergarten and staff quarters.

In return for Setia Federal Hill’s undertaking of the development, the Government will provide the associate company a 52-acre site on Federal Hill for the development of a mixed residential and commercial project worth RM15bil, which will be launched in 2017.

“This is a long-haul development that will contribute to our revenue over the next 15-20 years,” Choy said.

Once it is completed, it will house more than 5,000 personnel from the Ministry of Health.

For its financial quarter ended July 31, 2015, SP Setia posted a net profit of RM261.8mil, a 153% jump from RM103.3mil last year.

Revenue came in at RM1.6bil, 81% more than RM902.7mil last year, which the company attributed to “increased revenue and profit recognition for the development of a strong sales pipeline achieved to date and the timely staged handovers of its Australian project – Fulton Lane”.

SP Setia shares closed at RM3.13 yesterday.