SP Setia sees strong 3Q sales, records RM134m net profit

KUALA LUMPUR (Nov 15): S P Setia Bhd achieved a net profit of RM134.07 million or 4.88 sen per share in the three months ended Sept 30, 2016 on revenue of RM1.26 billion, as it saw strong sales of RM943 million during the quarter.

This pushed its cumulative nine-month earnings to RM383.24 million or 14.36 sen per share, as revenue came in at RM3.19 billion, the property developer said in its bourse filing today.

There were no comparable figures given as the group changed its financial year-end last year from Oct 31 to Dec 31.

It had previously announced on Aug 23 a single tier interim dividend of four sen per share, which would be payable on Nov 22. Shareholders have the option to reinvest the interim dividend into new SP Setia shares.

In a statement, SP Setia said it has achieved total sales of RM2.4 billion as at Oct 31, 2016, reflecting stronger demand for its projects in the second half of FY16.

For the nine months ended Sept 30, 2016, the group achieved sales of RM2.05 billion; the local projects contributed 89% of that, with international ones making up 11%.

"The sales secured are largely from the central region with RM1.43 billion while the southern, northern and eastern regions combined delivered RM386 million in sales, and international projects contributed RM232 million," according to the property developer.

It said the strong third quarter sales of RM943 million, is mainly in line with its expectation and the group foresees a continuing trend for the remaining months in 2016.

Commenting on SP Setia's performance, its president and chief executive officer Datuk Khor Chap Jen said the group is satisfied with the performance recorded during the quarter as it shows that the strategies SP Setia has adopted were effective.

"Despite the soft market condition, we observed resilient demand for affordable apartments and mid-priced properties while demand for condominiums that satisfy the lifestyle needs of the affluent market located in areas that are underserved such as Taman Seputeh, is promising," he added.

He believes the group would be able to customise its launches accordingly to suit market needs, given the expertise it has.

On the local front, projects in the Klang Valley continue to be a major contributor to the group in view of the strong take-up rate recorded.

“This bears testament to the product quality and facilities we have put in place for affordable apartments, that had resulted in the preference by home buyers to choose Setia over others,” he remarked.

As for the southern region, its two-storey terrace houses in Bukit Indah, Johor has so far chalked up an 80% take-up rate, indicating underlying demand is still strong for landed properties in Iskandar Malaysia, said the developer.

On the international front, Khor said though there has been renewed interest in the Battersea Power Station development due to the weakening British pound, the ‘wait-and-see’ approach still lingers as the market awaits more clarity post-Brexit.

"Nevertheless, the transaction secured with Apple Inc to take approximately 500,000 sq feet of office space in Battersea Power Station lends credence that Battersea Power Station is a great business location and London is still an international business centre.

"The strength of Apple’s brand name will be a great catalyst to uplift the value of Battersea Power Station,” he said.

Over in Australia, Khor shared the group's Maison apartments at Carnegie, Melbourne, achieved a 65% take-up rate despite the tightening measures introduced by the Australian government, especially for foreign investors.

Moving forward, SP Setia said it has delayed some of its apartment launches, but brought forward the launches of more mid-priced landed properties as well as retail shop lots.

"The group’s prospects going forward remain positive, with total unbilled sales of RM8.39 billion, anchored by 31 ongoing projects and effective remaining land bank of 3,595 acres with a gross development value of RM70.65 billion as of Sept 30," he added.

Shares in SP Setia closed up eight sen or 2.56% to close at RM3.20 today, giving the group a market capitalisation of RM8.99 billion. — theedgemarkets.com