KUALA LUMPUR: S P Setia Bhd has set a lower sales target of RM5 billion for the financial year ending Oct 31 (FY14), much lower than the RM8.2 billion recorded in FY13. However, the group’s strong unbilled sales of RM9.64 billion are expected to cushion the lower sales figure.
Outgoing president and chief executive officer (CEO) Tan Sri Liew Kee Sin said the government’s implementation of cooling measures, including real property gains tax, removal of developer interest-bearing scheme and tightening of the loan-to-value ratio for property purchases, are expected to result in subdued sales of the company’s properties.
“The government’s cooling measures are expected to take effect. But even at RM5 billion, we are still the biggest developer in Malaysia,” he told newsmen after the group’s annual and extraordinary general meetings yesterday.
Liew said S P Setia’s unbilled sales of RM9.64 billion would be able to sustain the group’s earnings for the next three to four years.
The group’s target for FY14 comprises sales from S P Setia’s Malaysian and overseas projects, including sales from its Battersea Power Station project in London in which it has a 40% stake. The other shareholders are Sime Darby Property Bhd (40%) and the Employees Provident Fund (20%).
For the first quarter ended Jan 31, S P Setia garnered sales of RM1.63 billion, a 34% increase from the RM1.22 billion recorded in the previous corresponding period. As at Feb 28, total group sales for the first four months of FY14 amounted to RM1.83 billion.
Liew said the strong performance for the first four months was due to the undiminished demand for affordable homes, particularly in the Klang Valley.
“At this time, we are focusing a lot on affordable housing and landed properties, where there is still great demand. We are very well positioned to tap this market because of the projects that we have, in terms of location and the types of development,” he said.
On the international front, Liew said S P Setia will be working on selling the remaining units of its Singapore and Australian projects this year.
“We will also be working closely with our joint venture partners to launch Phase 2 of the Battersea Power Station by mid-2014,” he added.
Looking ahead, Liew said despite the good start the rest of FY14 would be challenging.
“Demand has dampened considerably for higher-priced properties and cost pressures are rising. The industry also continues to face shortages of skilled labour.
“Given the large pipeline of properties to be completed as a result of the extremely strong sales over the last two to three years, execution and timely delivery will remain the group’s key focus areas for the rest of FY14,” he said.
Liew, who will relinquish his posts at S P Setia on April 30, will continue to look after the Battersea Power Station project until September 2015. Current acting president and CEO, Datuk Voon Tin Yow, will replace him after the latter’s departure from S P Setia.
|From left: Liew, S P Setia chairman Tun Zaki Tun Azmi, deputy president and chief operating officer Datuk Voon Tin Yow and executive vice-president and chief financial officer Datuk Teow Leong Seng.|
Liew said Voon’s tenure as the acting CEO is dependent on talks with the group’s majority shareholder, Permodalan Nasional Bhd (PNB).
“Voon is acting CEO for one year, and in the meantime, he will be discussing the future of the company with PNB and what they want to do.
“We must consult the major shareholder and find out their intentions. We cannot answer speculation,” he said in response to a question on whether Voon would also be resigning from the group.
This article first appeared in The Edge Financial Daily, on March 21, 2014.
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