S P Setia cuts FY16 sales target to RM3.5 bil

KUALA LUMPUR (Aug 24): Three months after expressing confidence that its RM4 billion property sales target for the current year is achievable, S P Setia Bhd yesterday lowered the figure to RM3.5 billion.

Its president and chief executive officer Datuk Khor Chap Jen (pictured) cited global uncertainty, especially in the aftermath of Brexit, and continued weak sentiment in the Malaysian property market for the downward revision.

Khor told the media after the group’s annual general meeting on May 18 that the group was confident of achieving RM4 billion in sales for the year ending Dec 31, 2016 (FY16) by being selective of projects it chooses to pursue.

However, in a statement yesterday to announce S P Setia’s second-quarter results, Khor mentioned the lower sales target.

“In view of the challenging environment ahead, the group is cautiously optimistic and remains resilient with its diversified range of new launches, ranging from affordable to upmarket, and landed to apartments in the second half of the financial year,” he said.

Khor said the group’s prospects remain positive with total unbilled sales of RM8.2 billion, anchored by 29 ongoing projects and effective remaining land bank of 3,805 acres (1,540ha) with a gross development value (GDV) of RM71.5 billion as at June 30.

S P Setia said that for the seven-month period ended July 31, the group achieved sales of RM1.35 billion. The figure for the first half ended June 30, 2016 (1HFY16) was RM1.11 billion.

“The sales secured were largely from the central region with RM856 million, southern, northern and eastern regions combined with RM140 million and international regions with RM109 million,” it said.

The sales secured in the Klang Valley, the group said, were mainly in line with its sales target compared to weaker sentiment in Johor, Penang and Sabah.

“It is noteworthy to mention that amid the current challenging market, S P Setia’s sales performed satisfactorily with an admirable 100% take-up rate of the RM272 million GDV landed properties launched in Setia Eco Templer in Selayang in May 2016,” said Khor.

“The Setia EcoHill 2 in Semenyih achieved an encouraging 72% take-up rate for its Everna cluster semi-detached homes during the recent launch in June 2016,” he said.

“This indicates that underlying demand for quality properties in strategic locations with good infrastructure, secure and self-sustained townships is still there,” he added.

S P Setia reported a net profit of RM125.78 million for the second quarter ended June 30, 2016, on the back of a revenue of RM1.01 billion.

For 1HFY16, the group reported a net profit of RM249.17 million on revenue of RM1.92 billion.

The group did not provide comparison figures as it changed its financial year end from Oct 31 to Dec 31, and stated its financial statements for the 14-month period ended Dec 31, 2015.

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This article first appeared in The Edge Financial Daily, on Aug 24, 2016. Subscribe to The Edge Financial Daily here.