Higher costs eat into SP Setia’s Q2 earnings, FY19 sales target slashed to RM4.55b

14 Aug 2019 / 15:42 H.

PETALING JAYA: SP Setia Bhd’s net profit for the second quarter ended June 30, 2019 tumbled 68.7% to RM138.73 million from RM442.74 million a year ago, mainly due to higher cost of sales and taxation.

Amid an uncertain macro-economic situation and prolong subdued property market, the group has revised the sales target for FY2019 from RM5.65 billion to RM4.55 billion, which is aligned to the present market conditions, according to its president & CEO Datuk Khor Chap Jen (pix).

Its revenue, however, jumped 44.3% to RM1.34 billion compared with RM925.97 million.

For the Islamic redeemable convertible preference shares, SP Setia has declared an interim dividend for the six-month period from January 1, 2019 to June 30, 2019 of 6.49% and 5.93% per annum respectively.

For the six-month period, the group’s net profit sank 62% to RM191.55 million from RM504.23 million while revenue went up 39.2% to RM2.20 billion versus RM1.58 billion a year ago.

The revenue and pretax profit achieved thus far were largely contributed by ongoing projects in Malaysia while on-going international projects of Battersea Power Station in London, UK as well as Sapphire by the Gardens and UNO in Melbourne, Australia were recognised on completion method, hence there was no profit contribution from the said international projects in the first half of FY2019.

Over the same period, the group secured sales of RM1.98 billion. Local projects contributed RM1.71 billion, which represented 87% of the total sales, while international projects contributed RM262.6 million, which represented the remaining 13% of the total sales.

For the first half of FY2019, properties worth RM1.55 billion in gross development value (GDV) were launched.

“The group continues to monitor the property market closely and has revised the total planned launches to RM3.33 billion for the second half of FY2019” said Khor.

The planned launches will focus in Klang Valley with RM2.32 billion and Johor with RM776 million worth of launches.

Given the versatility of the planned launches in the pipeline as well as the extension of Home Ownership Campaign, SP Setia is confident of achieving the revised sales target of RM4.55 billion.

“Anchored by 46 ongoing projects with 9,381 acres of effective land banks remaining and potential GDV of RM144.52 billion, prospects going forward remain positive with total unbilled sales of RM10.67 billion as at June 30, 2019.”

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