PETALING JAYA: Sime Darby Property Bhd
(SDP) has revised its sales target from RM2.3bil to RM2.7bil and gross development value (GDV) target from RM3bil to RM4bil for the year.
Group managing director Datuk Azmir Merican said the group is on track to achieve its full-year launch target of RM3bil. He noted that during the first half of the financial year 2023 (1H23), SDP has unveiled new projects valued at RM2.1bil.
“Our optimism is mainly supported by our achievement where we have reached more than 60% of our GDV launch target of RM3bil. The take-up rate is also favourable and we observe that contractors possess the capacity to undertake new projects effectively.
“We continue to stick to our bread and butter products which include landed homes, high-rise properties, and industrial lots. While some of the products may be regarded as big-ticket purchases, they continue to be very popular especially the Twin Factories and Semi-Detached Factory in our Elmina Business Park launch, which were 100% sold,” he told a media briefing here yesterday.
Azmir said SDP remains confident in achieving its sales target for the year in the event of a further interest rate hike.
“I think overnight policy rate (OPR) hike is a cost to everyone. It is a cost of doing business for us and it is also a cost to customers. While the possibility of another OPR hike may impact the group’s 2023 forecast, the market seems to be generally trading to the positive side. As such, we are confident that we will be able to achieve our 2023 numbers,” he said.
For 1H23, SDP saw a 25% increase year-on-year (y-o-y) in its revenue to RM1.4bil underpinned by higher site progress. Gross profit rose by 20.1% y-o-y to RM389.7mil in 1H23 and gross profit margin remained at a healthy level of 28% in 1H23 being above the group’s target of 20% to 25%.
“The higher site progress is also a sign that labour is slowly recovering and we are able to progress and almost normalising but not quite to where we were before,” Azmir said.
SDP recorded a lower pre-tax profit by 7.3% y-o-y at RM212.2mil, impacted by lower “other gains” in 1H23 as pre-tax profit in 1H22 included gains on the dilution of interest in its industrial development fund of RM44.1mil and the disposal of a leisure property in Vietnam for RM8.9mil.
On top of that, 1H23 saw a higher share of loss from SDP’s joint ventures which is primarily due to the Battersea Power Station venture.
“This is driven by the fact that in the UK, there are much higher finance costs as a result of the interest rate hike, as well as other factors, which impacts overall progress.
“Notwithstanding that, we feel that we have done well in 1H23. SDP’s profit after taxation and minority interest was RM131.7mil in 1H23,” Azmir said.
The property development segment remained the largest contributor to SDP’s revenue, making up 92.9% of total revenue.
Revenue for this segment grew by 27.3% y-o-y to RM1.3bil largely due to a combination of higher sales from residential and industrial products.
“We can see that property development is not only growing in the top line but also the profitability numbers are higher. I am happy to report that all our segments are doing well and remain quite resilient.
“In fact, we see these numbers are growing quite steadily from where we were about a year ago,” Azmir said.
