UEM Sunrise slashes sales target to RM2b

KUALA LUMPUR: Property developer UEM Sunrise Bhd slashed its full-year sales target to RM2 billion from RM3.2 billion as the group’s financial results faltered in the second quarter ended June 30, 2014.

Its net profit dropped 30.6% year-on-year (y-o-y) to RM74.5 million from RM107.3 million, a filing with Bursa Malaysia yesterday showed.

It told the local bourse that the lower profit was mainly due to cost revision made in certain projects — which it did not specify. It is also due to lower revenue, which dropped 5.9% y-o-y to RM447.6 million from RM475.9 million, caused by lower property development revenue.

In a media statement, UEM Sunrise executive director Datuk Izzaddin Idris said that in view of a “challenging market environment”, UEM Sunrise had scaled down its 2014 sales target.

“The impact of the cooling measures following the Budget 2014 announcement, concern on potential oversupply in Iskandar Malaysia and other factors, have created uncertainty in the property market. This [has] resulted in a slowdown in buying momentum.”

Consequently, sales recorded by the group in the first half of the year were significantly lower.

For the half-year period (1HFY14), UEM Sunrise’s net profit stood at RM136.05 million versus RM318.42 million a year ago, which it said was in line with the lower land revenue recorded.

Meanwhile, its revenue slipped to RM849.19 million from RM1.17 billion a year ago. The marked y-o-y difference is due to the sale of land in Puteri Harbour to Liberty Bridge Sdn Bhd of RM400 million in 2013.

Excluding the land sale, UEM Sunrise said the revenue from its property development activities had actually increased by 14% to RM784 million in 1HFY14 from RM689.2 million in 1HFY13.

Going forward, the group expects the outlook for the property market to remain challenging for the rest of the year.

“We have, thus, reviewed several development plans to cater to the current market environment and revisited our planned launches,” said Izzaddin.

He said the group is focusing its resources on providing landed products and mid-market to affordable homes, where the demand is still relatively strong.

“This year has proven to be a challenging year thus far for UEM Sunrise. But, it enables us to consolidate and seize the opportunity to strengthen our core competencies, processes and to tighten the quality of our delivery so that we are well-positioned for the next property upcycle,” he added.

UEM Sunrise, with a market capitalisation of RM8.8 billion, closed three sen down or 1.5% lower at RM1.94 yesterday.

This article first appeared in The Edge Financial Daily, on August 26, 2014.