Sunway says on track for RM1.8b in property sales this year

KUALA LUMPUR: Backed with launches worth up to RM2.3 billion this year, Sunway Bhd said it is on track to sustain its property sales of RM1.8 billion for last year in the current year. 

“We think the target is achievable. The industry has experienced a slower first half ... due to cooling measures. But typically our sales are ... cyclical, where we achieve stronger sales in the second half,” its chief financial officer Chong Chang Choong said after Sunway’s annual general meeting yesterday, noting that sales as at the end of the first quarter came to RM350 million.

The group’s key property launches this year include Sunway Velocity Residences, Sunway South Quay Service Apartments, Citrine, Sunway Iskandar, and Mount Sophia in Singapore. According to management, the property division’s unbilled sales stood at RM2.4 billion as at March 31 this year. Malaysia accounted for RM1.86 billion and Singapore RM499 million. Sales from Singapore will not be included in revenue as the project is held through a 30%-owned entity.

Sunway still holds 3,388 acres (1,371ha) of undeveloped landbank with a potential gross development value (GDV) of RM50.5 billion, to be developed over a period of 15 years. The bulk of the GDV is from its landbank in Johor (61%), followed by the Klang Valley (21%), Penang (7%), Singapore (4%) and China (3%).

Last year, Sunway’s property development and property investment divisions achieved RM1.78 billion in revenue. For the first quarter ended March 31 of financial year 2014 (1QFY14), revenue from these two divisions came in at RM358.6 million, with a net profit of RM67.9 million.

Chong expects Sunway’s other business divisions to do well this year.

“Construction is definitely in a sweet spot, with many infrastructure projects to be rolled out by government-linked companies,” he said.

The group’s construction order book stood at RM3.6 billion, he said, which will last for the next two to three years. Of the total, infrastructure jobs related to the Klang Valley Mass Rapid Transit system and the Light Rail Transit system accounted for the lion’s share at RM1.3 billion.

The group’s construction tender book stood at RM3.5 billion, said Chong. The construction segment contributed 35% to group revenue of RM1.03 billion and 22.7% to group net profit of RM104 million in 1QFY14. On its trading and manufacturing division, Chong acknowledged that market conditions in Australia and Indonesia remain challenging.

“We distribute industrial hoses related to the mining industry in Australia and Indonesia. As you know, mining there is undergoing a bit of a slowdown, that’s why our performance there is not as good as before,” he said. “Nevertheless, the better performance in Malaysia and Singapore more than compensate for the slowdown from Australia and Indonesia.”

Trading and manufacturing contributed 14.5% to group revenue and 5.4% to group net profit in 1QFY14. Overall, Chong said the group expects contributions from property development, property investment, and construction to remain fairly similar going forward.

“These three divisions contribute close to 85% of our group’s net profit. The whole pie is growing, so contributions will be fairly similar.”

This article first appeared in The Edge Financial Daily, on June 27, 2014.

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