Maybank Research's top pick is Sime Darby Property as it has an advantage over many developers.
KUALA LUMPUR: Sime Darby Property Bhd
's net profit surged by 687% to RM265.07mil in the first quarter ended March 31, 2019, boosted by its property business segments and the disposal gain from a property in Singapore.
It said on Wednesday there was a disposal gain from Darby Park Executive Suites, Singapore of RM203.4mil (2018: gain on disposal of investment properties in the UK of RM9.4mil).
Revenue rose by 2.8% to RM575.13mil and profit before tax jumped by 687.3% to RM301.48mil, it said. Earnings per share were 3.9 sen compared with 0.5 sen.
There was a share of results of joint ventures of RM3.84mil compared with a loss of RM7.86mil a year ago.
Sime Property said its property development performance improved significantly by 110.6%from a year ago mainly to higher contribution from Bandar Bukit Raja, Denai Alam, Nilai Impian/Utama townships and Cantara Residences in Ara Damansara, which was offsett with lower contribution from Elmina and Bandar Universiti Pagoh townships.
It said the Bandar Bukit Raja, Denai Alam, Nilai Impian/Utama township and Cantara Residences registered better results due mainly to higher sales and development activities as compared to a year ago.
IThe Group’s share of results of joint ventures and associates have also improved from a loss of RM19mil to a profit of RM1.8mil.
“This is mainly attributable to the higher contribution from joint venture project, PJ Midtown and lower share of losses from Battersea and Sime Darby Sunrise joint ventures,” it said.
Last year, the group’s results were impacted with share of RM12mil impairment losses in the 50% owned Sime Darby Sunrise joint venture.
Sime Property said the group had since launched 474 units, with a combined gross development value of RM363mil in the first quarter and an additional of 600 over units, worth more than RM550mil in April.
“The group is confident of achieving its sales target following the success of the group’s Primetime 8 campaign, which had seen an overwhelming take-up for its new launches, that is 100% take-up on launch day for Elsa (Bandar Bukit Raja), 90% take-up for Elmina Valley Five (Elmina West) and more than 70% for the group’s high rise product, The Ridge (KL East),” it said.
Sime Property said it launched its Raya 2019 campaign from May 15 to June 30 which would continue to help the group to maintain its momentum of high sales and take-up of its products in the coming quarters.
As at end-March, its total unbilled sales were RM2.1bil.
“Following the completion of the disposal of the Battersea Power Station Phase 2 Commercial Assets on March 14, 2019, the group does not expect further equity commitment for the commercial asset development for the current financial year,” it said.
Sime Property had also completed the disposal of 300 acres of land in Bukit Selarong, Kedah in May. This disposal would be recognised in the second quarter.
“The completion of these disposals would allow the group to channel its additional cash resources towards the development activities of the group and to expand its industrial and logistics portfolio, leveraging on the strategic location of its land bank,” it said.
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