Sunway's 2Q earnings fall on lower contribution from property investment

• The group said that due to Malaysian Financial Reporting Standards' (MFRS) 15 accounting treatment, the development profit from two of the group’s ongoing Singapore property development projects will only be recognised upon their completion and handover.

KUALA LUMPUR (Aug 24): Sunway Bhd’s net profit fell 7.2% to RM149.93 million in the second quarter ended June 30, 2023 (2QFY2023), from RM161.49 million a year earlier, as lower contribution from property investment and other operating income more than offset a rise in revenue.

The group said that due to Malaysian Financial Reporting Standards' (MFRS) 15 accounting treatment, the development profit from two of the group’s ongoing Singapore property development projects will only be recognised upon their completion and handover. 

As a result, the accumulated progressive profit related to these projects as at the end of 2QFY2023 of RM131.1 million — of which RM9.5 million was for the quarter — was not recognised, the group said in a filing to Bursa Malaysia.

Sunway's revenue rose 14.7% to RM1.47 billion, from RM1.28 billion in 2QFY2022, underpinned by better contributions from most of its business segments.

The group declared a first interim dividend of two sen per share and a preferential dividend of 5.25% (based on the issue price of RM1.00) per irredeemable convertible preference share in respect of the first half of FY2023.

For the six months ended June 30, net profit fell slightly by 2% to RM291.57 from RM298 million in the same period last year, while revenue increased by over 14% to RM2.73 billion from RM2.39 billion.

Sunway Group president Tan Sri Chew Chee Kin said in a statement: “The healthcare segment will continue to be one of the group’s main growth drivers as the three existing hospitals continue to register strong growth. Its pipeline of several new hospitals coming on stream in the next few years will provide future earnings growth."

Chew expects the group's leisure, hospitality, and healthcare segments to benefit from further improvement in in-bound leisure and medical-related tourism in the second half of this year from increased international arrivals.

He said Sunway is looking forward to the completion of the Rapid Transit System rail link between Johor and Singapore in 2026 and the potential establishment of the Johor-Singapore Special Economic Zone, which will substantially improve the cross-border movement of people and goods. 

“Such developments will augur well for Sunway City Iskandar Puteri, the group’s flagship township development which is strategically located between Puteri Harbour and the Second Link to Singapore,” he added.

Sunway's share price closed one sen or 0.5% higher at RM1.91 on Thursday (Aug  24), valuing the group at RM9.55 billion.

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