Sime Darby Property soars to near six-year high after 1Q results

• Core net profit for the first three months ended March 31, 2024 (1QFY2024) accounted for 29% of consensus’ full-year estimates, which was above expectations, as analysts noted that SimeProp usually reports stronger results in the second half.

KUALA LUMPUR (May 23): Shares of Sime Darby Property Bhd (KL:SIMEPROP) climbed to its highest in nearly six years as analysts scrambled to raise their forecasts after the developer reported better-than-expected results.

SimeProp rose as much as 5.6% or six sen to RM1.13, its highest since August 2018. The stock was trading at RM1.11, valuing the company at over RM7.5 billion, after more than 3.2 million shares changed hands at 9.05am.

Core net profit for the first three months ended March 31, 2024 (1QFY2024) accounted for 29% of consensus’ full-year estimates, which was above expectations, as analysts noted that SimeProp usually reports stronger results in the second half.

“The property sector is at the advent of a new cycle,” said Hong Leong Investment Bank. “SimeProp is having a head start in this upcycle given its exposure to the thriving industrial segment and the improving residential landed market in the Greater Klang Valley area.”

The research house, which maintained its “buy” call on the stock, pointed out that SimeProp has Malaysia’s largest industrial landbank that could yield over RM15 billion in gross development value.

Shares in SimeProp have surged more than 80% so far this year, significantly outperforming most of its peers in the property sector, thanks to strong housing demand and its diversification into industrial properties that come with faster billings and higher margins.

Industrial products accounted for 30.2% of the quarter’s total sales, while residential-landed made up 26.7% and residential high-rise accounted for 24.5%, according to SimeProp.

Despite recent rally, analysts are still broadly bullish of further upside, with 10 out of 13 recommending “buy” calls, according to Bloomberg.

“We place our target price and recommendation under review pending more updates from an analyst briefing to be held later today,” said TA Securities whose last call on SimeProp was “buy”.

SimeProp’s own sales target of RM3 billion for FY2024 appears “highly achievable” given that the company has secured property sales worth RM956 million by March and bookings totalling RM2.4 billion by April which have yet to be converted into sales, the research house flagged.

RHB Investment Bank, which has “buy” call on SimeProp, also expects SimeProp to surpass its “conservative” sales target by year-end. “We believe the strong property sales momentum will continue in the coming quarters,” the house said.

On its part, SimeProp said it is set for further growth with the launch of The Ophera and the Elmina Lakeside Mall. Unbilled sales totalled RM3.6 billion, which will contribute to earnings for the next three years, the company noted.

Its outlook for FY2024 is favourable, given the robust industrial segment and general improvement in the residential market, SimeProp added.

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