KUALA LUMPUR: Sime Darby Property Bhd
is adopting a cautious stance on the near term outlook for the local property sector, in light of the uncertainty in the market currently.
Group chief financial officer Datuk Tong Poh Keow said there is still a need for clarity on the implementation of the sales and service tax (effective next month), adding that buyers are also adopting a “wait-and-see” approach.
“There is also an oversupply of high rise medium range properties. The industry is producing faster than the absorption rate,” she said at a briefing on the company’s fourth quarter earnings today.
For 2018, Sime Darby Property aims to launch a total of 1,500 units, equivalent to a combined gross sales value of RM1.1bil concentrated heavily in properties within the RM400,000 to RM850,000 price range.
The group sets its targets for sales and unbilled Sales for 2018 of RM1bil and RM2.2bil, respectively.
Sime Darby Property’s net profit for its fourth quarter ended June 30, 2018 plunged 86% to RM46.57mil from RM327.66mil in the previous corresponding period, while revenue in the fourth quarter dropped to RM617.37mil from RM1.14bil a year earlier.
For its financial year ended June 30, 2018, the company’s net profit increased to RM640.01mil from RM624.03mil in the previous corresponding period, while revenue dropped to RM2.35bil from RM2.61bil a year earlier.
In a filing with Bursa Malaysia yesterday, the company said contributions from property development decreased by 38.2% compared to the previous year.
“The previous year’s result included gains on compulsory acquisition / disposal of land of RM468.8mil whilst current year included gain on disposal of land of RM87.6mil.
Excluding these items, Sime Darby Property said core operating profit for the current year registered a marked increase of 161%.
This was mainly contributed by higher sales and development activities at Elmina West, Elmina East, Serenia City and Bukit Jelutong townships and Cantara Residences and Serini Melawati in spite of the lower contribution from Nilai Utama, Nilai Impian and Bandar Bukit Raja townships.
“Included in the previous year results was an impairment of inventories of RM149mil,” it said.
“In addition, Serenity Cove in Australia contributed a profit of RM56.1mil from reversal of write down of inventories and sale of plots of residential land as compared to a profit of RM4.8mil the previous year.”
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