SP Setia 4Q09 net profit down 25% to RM56.86m

KUALA LUMPUR: SP Setia Bhd net profit for the fourth quarter ended Oct 31, 2009 fell 25% to RM56.86 million from RM76.08 million a year ago, mainly due to the inclusion of profit recognised on the disposal of its 25.07% interest held in Loh & Loh Corporation Bhd amounting to RM26.9 million a year ago.

However, the effect was partially mitigated by the recognition of profits on the disposal of land to Greenhill Resources Sdn Bhd in the current quarter of this financial year, the company said on Thursday, Dec 10. It proposed dividend of nine sen per share.

For the full-year, net profit was RM171.23 million compared to RM213.46 million, while revenue declined to RM1.41 billion from RM1.47 billion.

S P Setia’s profit and revenue were mainly derived from its property development activities carried out in the Klang Valley, Johor Bahru and Penang.

Ongoing projects that contributed to the group’s profit and revenue include Setia Alam and Setia Eco-Park at Shah Alam, SetiaHills at Bukit Indah Ampang, Setia Walk at Pusat Bandar Puchong, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru and Setia Pearl Island in Penang, it said.

Apart from property development, the group’s construction and wood-based manufacturing activities also contributed to the earnings achieved, it said.

Reviewing its performance, SP Setia said that in FY2009 it set a new benchmark in terms of total sales of RM1.65 billion, or an 18% improvement from its previous record-high achieved in FY2008 and 50% higher than its FY2009 sales target of RM1.1 billion.

Of the total, Malaysian projects accounted for RM1.58 billion whilst EcoLakes, the group’s maiden project in Vietnam, achieved a commendable US$21 million or RM71 million from the launch of its first two phases, it said.

SP Setia said the strength of its sales was a strong testament not only of the resilience of the regional property market particularly that of Malaysia but also of the inherent attractiveness and desirability of its products – twin conditions necessary to excel in challenging times.

Macroeconomic conditions in the region are expected to further improve in FY2010, which will enable the group to reap the benefits of the long-term seeds of growth planted in FY2009, it said.

“These include the strategic decision made to proceed with the launch of Setia Sky Residences, Setia Walk and EcoLakes, projects that represent the group’s maiden expansion into the luxury high-rise, integrated commercial and international spheres respectively.

“The strong take up rates of 80% top 90% achieved by all three projects in these new markets are early firstfruits of the group’s bold implementation of its growth plans amid the turbulence of FY2009,” it said.

The company said that for FY2010, its management intends to focus on improving overall yields by targeting to grow either the gross development value and/or margins on properties sold through continued value creation on all its development projects.

Other plans include the proposed disposal of certain non-core assets and deployment of its strong balance sheet to acquire new landbank to secure long-term growth prospects.

“While near-term profit margins will continue to remain range-bound next year due to the flow-through effect of the 5/95 financial incentives given and the attractive introductory prices in 2009 for new project launches, the group is still expected to see a return to earnings growth in 2010.

“As such, based on the strong sales achieved in FY2009, management’s plans for FY2010 and on the assumption that macroeconomic factors remain conducive, the consensus earnings growth of between 10% and 15% estimated by investment analysts is in-line with internal management targets,” it said.