Sime Darby Property’s net profit up 17% to RM60.7mil

Sime Darby Property Bhd’s (SDP) first quarter net profit rose 17.04% to RM60.67 million for the financial period ended March 31, 2023 (Q1 FY2023) from RM51.84 million in the same period last year.

SDP attributed its stronger performance to the emerging industrial segment and robust residential sales.

Meanwhile, its revenue rose by 42.68% year-on-year to RM685.33 million from RM480.33 million.

“The industrial segment’s contribution surpassed residential as the key contributor with 55% or RM376 million of total sales achieved for the quarter under review,” it said.

The property development segment led the way with RM636.8 million in revenue, equivalent to 92.9% of the group’s Q1 FY2023 revenue.

The segment cleared RM87.3 million in profit on the back of strong sales of industrial and residential products in the prior year along with increased on-site development activities in Bandar Bukit Raja, City of Elmina, Nilai Impian, Elmina Business Park and Hamilton Nilai City.

Meanwhile, the investment and asset management segment posted a RM2.9 million loss in Q1 FY2023 from an RM8.9 million profit in the same quarter last year.

This was due to recognition of share loss of RM8.4 million from joint ventures and associates, compared to a share profit of RM2.8 million in the corresponding period last year.

The leisure segment turned around from a loss of RM0.8 million to a profit of RM1.7 million this quarter, due to improvements in revenue contributions from events and functions, food and beverages, and golfing activities.

Land acquisition approved

In its bursa filing yesterday, SDP announced that the proposed acquisition of three parcels of freehold land totalling 948.8 acres in Kapar, Klang for RM618 million was approved at its extraordinary general meeting.

The acquisition is aimed at strengthening SDP’s industrial development portfolio.

“The Kapar land acquisition is in line with SDP’s SHIFT25 strategy, which aims to transform the company from a pure play property developer into a real estate company by broadening and diversifying its income streams,” it said.

The proposed development of the Kapar land will be carried out in phases over a period of 10 to 15 years, with an estimated gross development value (GDV) of between RM5 billion and RM6 billion.

The foray into the industrial sector is “in line with our plan to diversify the product mix of our Engine 1 core business”, said SDP managing director Azmir Merican.

Going forward, SDP expects the property market to remain steady in 2023, backed by indications of healthy demand for its landed residential and industrial products.

As at March 31, 2023, the group had RM1.7 billion in bookings and an unbilled sales record of RM3.6 billion, while net gearing ratio remained at 20.4%.

The group is on track to reach its diversified launch pipeline goal of RM3 billion in GDV in 2023, with Azmir adding that SDP is “bullish” about the year’s remainder.

SDP has launched a product mix amounting to RM1 billion in GDV to date across its established townships.

At market close, SDP’s share price rose 4.4% or two sen to 47 sen, valuing the company at RM3.16 billion.

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