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SP SETIA Bhd has lowered its sales target for the year as the soft property market led to its lower earnings for the second quarter ended June 30, 2019 (2Q19).

Amid an uncertain macro-economic situation and prolonged subdued property market, SP Setia revised the sales target for financial year 2019 (FY19) to RM4.55 billion from RM5.65 billion.

“The group continues to monitor the property market and has revised the total planned launches to RM3.33 billion for the second half of FY19 (2H19)” its president and CEO Datuk Khor Chap Jen (picture) said in a statement yesterday.

This comes as the developer’s net profit for 2Q fell 68.7% year-on-year (YoY) to RM138.73 million due to lower contribution from its property development segment.

In an exchange filing yesterday, the company reported a RM214.9 million profit from the property development segment in the three months, 60.5% lower YoY from RM544.47 million recorded in 2Q18.

SP Setia had a one-off provisional fair value gain of RM343.8 million in 2Q18, contributed by the remeasurement of existing equity stake in Setia Federal Hill Sdn Bhd as SP Setia acquired the remaining stake in the company.

The developer’s earnings per share (EPS) plunged to 1.81 sen in 2Q19 from 10.54 sen EPS in 2Q18.

SP Setia’s quarterly revenue, however, rose 44.1% YoY to RM1.34 billion, largely due to the former British Embassy Land disposal for RM449.2 million.

SP Setia said revenue and earnings came from the ongoing and completed projects — such as Setia Alam, Setia Eco Park, Alam Impian and Temasya Glenmarie in Shah Alam; Setia EcoHill, Setia EcoHill 2 and Setia Mayuri projects in Semenyih; the Setia Eco Glades project in Cyberjaya; and the Setia Eco Templer development in Rawang.

International projects such as Daintree Residence in Singapore, and Maison Carnegie in Australia have also contributed to the segment’s performance.

For 1H19, SP Setia secured sales of RM1.98 billion with local projects contributing RM1.71 billion or 87% of total sales and international projects the remaining RM262.6 million or 13%.

The sales secured were primarily from the central region of Peninsular Malaysia which contributed RM1.19 billion, while the southern and northern regions contributed a combined sales of RM522 million.

Its international projects, UNO Melbourne in Australia and Daintree Residence in Singapore, contributed RM222 million in sales.

Of the RM3.33 billion launches planned for 2H19, RM2.32 billion will be property launches in the Klang Valley and RM776 million worth of launches in Johor, the company stated.

In the Klang Valley, the planned launches include Setia Alam, Setia Eco Park, Setia Safiro, Setia Alamsari, Setia Ecohill 1 and 2, Setia Warisan Tropika and Bandar Kinrara, while in Johor, the planned launches are in Setia Tropika, Setia Eco Gardens, Bukit Indah Johor and Taman Industri Jaya.

In mainland Penang, Setia Fontaines has RM164 million in gross development value (GDV) launches comprising landed residential properties priced from RM330,000 onwards.

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

The group has 46 ongoing projects with 9,381 acres (3796ha) of effective land banks remaining and potential GDV of RM144.52 billion.

SP Setia stated that its prospects going forward remain positive with total unbilled sales of RM10.67 billion as at 2Q19.

The group declared an interim dividend of 6.49% per annum and 5.93% per annum respectively for the Islamic redeemable convertible preference shares; RCPS-i A and RCPS-i B.

The stock closed three sen lower at RM1.76 yesterday on the release of its 2Q results.

News Source: The Malaysian Reserve, 15 August 2019

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