Property development and investment, quarry biz pull Sunway net profit up 10.5% in 4Q

KUALA LUMPUR (Feb 25): Sunway Bhd posted a 10.47% higher net profit of RM200.31 million for the fourth quarter ended Dec 31, 2019 (4QFY19) from RM181.24 million a year ago, on higher contributions from its property development, quarry and property investment segments.

The higher net profit was despite a 6.83% decline in revenue to RM1.35 billion during the quarter, from RM1.45 billion, due to lower contributions from its other divisions.

Sunway highlighted that due to the adoption of the Malaysian Financial Reporting Standards 15 (MFRS 15) standards on its property developments in Singapore and China, the group can only recognise development profits upon their completion.

“The full recognition of the balance of the development profit of approximately RM160 million for the projects will be done upon vacant possession delivery in 2020,” it stated.

It is declaring a second interim cash dividend of 4.5 sen per share for the quarter, compared with 3.62 sen in 4QFY18.

However, the board has resolved that the dividend reinvestment scheme, which was approved by Sunway’s shareholders, will apply to the entire portion of the second interim dividend.

In total, the group‘s total annual dividend payout for FY19 — including the distribution of one treasury share for every 100 ordinary shares held — is 9.07 sen, up from 7.12 sen declared in FY18.

Meanwhile, net profit in FY19 rose 18.76% to RM766.63 million from RM645.51 million a year ago, mainly due to higher profit contributions from most business segments except construction and trading and manufacturing.

This is despite revenue declining 11.64% to RM4.78 billion from RM5.41 billion last year, due to lower contributions from most business segments except quarry and healthcare.

On its prospects, the group said Bank Negara Malaysia’s cut in its overnight policy rate (OPR) bodes well for the local economy as lower borrowing costs will support household spending and private investment projects.

“Nevertheless, there are downside risks to growth, especially from the impact of the outbreak of the COVID-19. In view of the above, the group will continue with its prudent business strategy, while charting its expansion plan based on its resilient diversified business model.

Barring any prolonged economic slowdown, the group will continue to perform satisfactorily in 2020,” the group said.

Shares in Sunway closed 1.71% or three sen higher at RM1.78, giving it a market capitalisation of RM8.78 billion. It saw 3.84 million shares traded.

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