Sime Darby Property's 3Q profit jumps 18-fold on lower provisions

KUALA LUMPUR (May 25): Sime Darby Property Bhd (SD Property) saw an 18-fold year-on-year (y-o-y) rise in net profit for the third quarter ended March 31, 2018 (3QFY18) to RM33.67 million from RM1.86 million, on lower provisions, as well as a gain on disposal on investment properties.

An exchange filing today showed that among the lower provisions recognised during the quarter was for unsold stock, the group had recognised a higher provision for inventories of RM78.6 million in 3QFY17 compared to RM756,000 in 3QFY18.

The group had also recognised a gain on disposal of investment properties in the quarter amounting to RM9.94 million, which included a gain on disposal of an investment property in the United Kingdom of RM8.7 million.

Revenue for 3QFY18 fell 6% to RM550.67 million from RM585.75 million in 3QFY17.

For the nine months ended March 31, 2018 (9MFY18) SD Property reported a two-fold y-o-y rise in net profit to RM593.44 million from RM296.37 million, contributed by other gains of RM317.8 million — comprising the gains on the disposals of Malaysia Land Development Company Bhd and the 40% equity stake in Seriemas Development Sdn Bhd of RM39.6 million and RM278.2 million, respectively.

Revenue for 9MFY18 grew 18% y-o-y to RM1.69 billion from RM1.44 billion, contributed by higher sales and development activities at Elmina West, Elmina East, Serenia City, Taman Melawati and Serenity Cove, Australia.

The group's total unbilled sales stand at about RM1.5 billion, representing about 0.8 times its annual sales revenue.

On prospects, the group said it is on track to launch 709 property units for the remaining three months of FY18, which includes 337 units of mid-range landed properties in Elmina West, with a combined estimated gross development value of approximately RM632 million.

In the United Kingdom, SD Property's 40% joint venture, Battersea Power Station Holding Co Ltd, is focused on the developments of Phases 2 and 3, which are targeted to be completed by end-2020 to early-2021.

"The strong response to the group's recent launches is testament of [our] strategy to focus on the mid-to-affordable range of landed properties.

"Against the current economic backdrop, the group, as the country's largest property developer by land bank size, is optimistic of the sector's medium to longer term prospects given the strategic locations of our land bank in key economic growth corridors and multi-modal transportation hubs," it said.

SD Property shares slid 3 sen or 2.04% yesterday to close at RM1.44, for a market capitalisation of RM9.52 billion. — theedgemarkets.com

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