S P Setia to launch projects worth RM4b in 2H18

KUALA LUMPUR (August 24): S P Setia Bhd plans to launch new projects with an estimated gross development value (GDV) of RM4.05 billion in the second half of the year (2H18), about two-thirds in Malaysia and a third overseas.

President and chief executive officer Datuk Khor Chap Jen said the group is set to ramp up the new launches in the second half after unveiling over RM2 billion worth in the first half.

At a results briefing yesterday, he said the upcoming launches will focus more on the Klang Valley, with planned projects in Setia Alam, Setia Ecohill, Setia Ecohill 2, Setia Eco Templer, Setia Eco Glades, Setia Sky Seputeh (Tower B), Temasya Glenmarie, Setia Alamsari and Setia Alaman, all with a combined GDV of RM2.23 billion.

In the northern region, the group will launch its maiden project, Setia Fontaines, on the Penang mainland, at the end of the year.

“The new project will kickstart with the launching of shops and some linked detached units with a selling price of less than RM400,000 per unit,” Khor added.

He said the local property market appeared to be “moving sideways” but observed the robust underlying demand for landed units. As such, he said the property developer would emphasise smaller built-up landed units as they are well received by property buyers amid the cautious market sentiments and stringent bank lending.

The company is confident that the right strategy and launches this year will help it achieve its RM5 billion sales target for financial year 2018 (FY18).
Khor said the strategy to emphasise smaller built-up landed units termed the “Starter Home” series had proven to be successful, as its flagship township Setia Alam topped local sales. “The interest in the Starter Home series remained strong, as they were within the affordability range of most first-time homebuyers seeking landed homes in established townships.”

On the international front, launches include Singapore’s Daintree Residence condominium — with a GDV of S$480 million (RM1.42 billion) — and Vietnam’s Eco Xuan township.

S P Setia secured sales of RM2.11 billion in the first half, with local projects contributing RM1.41 billion or two-thirds of total sales, and international projects RM705.3 million or a third.

Overall, the group’s prospects remain positive with total unbilled sales of RM8.12 billion, anchored by 46 ongoing projects and the remaining land bank of 9,587 acres (3,880ha) with a GDV of RM155.94 billion as at June 30, 2018.

Khor said the abolishment of the goods and services tax did not result in a surge in property demand as consumers were waiting for the Pakatan Harapan-led government to make clear its proposed housing policies.

He said the group can only weigh the full impact of the sales and services tax upon its roll-out in September but foresees some cost savings in construction.
In the second quarter ended June 30, 2018, the property developer posted a 77% year-on-year increase in net profit to RM442.74 million from RM250.57 million as it registered a RM343.8 million one-off provisional fair value gain.

Revenue rose to RM925.97 million in the second quarter from RM866.35 million a year ago.

For the cumulative six months, net profit climbed to RM504.23 million from RM362.68 million a year earlier, although revenue was lower at RM1.58 billion from RM1.89 billion previously.

S P Setia closed unchanged yesterday at RM2.94, with a market capitalisation of RM11.47 billion.

This article first appeared in The Edge Financial Daily, on Aug 24, 2018.

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