S P Setia hopes for higher contribution from overseas projects

KUALA LUMPUR: S P Setia Bhd is hoping to see its overseas developments contributing more substantially to its bottomline in the next five years as it expands in Vietnam and China. Currently, overseas projects contribute about 5% to the company’s revenue and profit.

President and chief executive officer Tan Sri Liew Kee Sin said overseas projects would still only make minimal contribution to company revenue in the first three years.

“While our Malaysian residential projects continue to provide a solid earnings base -- we hope to see a higher margin of contribution from our overseas projects in the future,” he said at a luncheon talk organised by MIDF Amanah Investment Bank Bhd here on Wednesday, March 24.  

Liew said it would take time for S P Setia to establish its presence in the two countries before any substantial contribution could be seen. 

“It took 20 years for us to build S P Setia to become where we are today in Malaysia. Likewise, it would take time for us [in Vietnam and China] as we need to learn and study the markets there without overspending on capex,” he said. 

S P Setia has invested US$12 million (RM39.81 million) in three projects in South Vietnam with a total gross development value (GDV) of US$1 billion. It has 585 acres of landbank located in Binh Duong province. 

Last October, S P Setia secured its first project in Hangzhou, China with a GDV of RM2 billion. 

The project, which comprises residential and commercial buildings including a hotel, would be developed in four phases over five years and is a joint venture with Hangzhou Ju Shen Construction Engineering Ltd.

“At the meantime, we still believe that we would see growth locally as we command less than 5% of the local market. There is definitely room for growth,” he said. 

S P Setia recently raised its sales target by 25% to RM2 billion for FY2010, after seeing its profit rise 22.5% to RM38.2 million in its first quarter ended Jan 31, 2010 from RM31.18 million a year earlier.

Its profit and revenue were mainly derived from property developments in the Klang Valley, Johor Baru and Penaing, the company said in a statement on March 18.