S P Setia president and chief executive Datuk Choong Kai Wai.
PETALING JAYA: S P Setia Bhd is confident its projections for continued upward momentum in 2024 look secure, supported by new projects launched during the first quarter (1Q24) and a favourable market uptake.
The property group said projects commenced in the first three months of the year had a combined gross development value (GDV) of RM146.2mil.
On top of that, it highlighted that strong unbilled sales and its 41 active projects, which are spread across its strategically positioned land banks, also underpin its measured approach in balancing capital allocation decisions and growth expansion plans.
For its first quarter ended March 31, 2024 (1Q24), the property developer saw net profit jumping 39.4% year-on-year (y-o-y) to RM77.3mil, as revenue soared 52.5% to RM1.48bil.
Analysing its results, S P Setia said its property development segment achieved a 57.1% y-o-y increase in revenue to RM1.41bil.
This was primarily due to the higher contribution from Vietnam with the handover of its Eco Xuan project in Ho Chi Minh City, and higher domestic property development turnover.
That aside, higher gross earnings also contributed to its improved profits, although this was partially reduced by increased financing cost.
“Under construction and completed projects which contributed to the results include Setia Alam, Setia Eco Park, KL Eco City at Jalan Bangsar, Setia Fontaines in Penang, as well as UNO Melbourne and Sapphire by the Gardens in Australia,” it said.
Commenting on the results, S P Setia president and chief executive Datuk Choong Kai Wai said: “Our 1Q24 results are testament to the robustness of our business model and the success of our strategic market expansions.
“We have seen growth across the board, and while we are looking ahead with positivity, we are conscious of the need to maintain a steady hand on the tiller.”
He observed that project completions, notably within Australia, have also been successful and served to justify the group’s diversified approach.
On top of property development, S P Setia revealed in a statement that revenue from other operations had mainly consisted of manufacturing and investment properties such as office towers, retail malls, convention centres and hotels.
Reduced loss from its construction segment, coupled with higher contribution from investment properties and hotel operations have also turned a RM14.5mil loss for these divisions in the corresponding quarter of 2023 into a RM400,000 pre-tax profit for 1Q24, it said.
Meanwhile, compared with the preceding three months ended Dec 31, 2023, earnings dropped 47.8% from RM148.2mil, despite revenue actually growing 6.7% from RM1.38bil.
“This is mainly due to the lower contribution from certain development townships in the Klang Valley in 1Q24 and reduced contribution from our Australia operations upon the handover of UNO Melbourne (Phase 2) in 4Q23,” the group said.
While not declaring any dividends for the quarter, the group said it was on track to achieve its RM4.4bil sales target for 2024, bolstered by the 4% to 5% projected economic growth for this year, and supported by resilient domestic demand, as well as the improvement in the external demand outlook by Bank Negara.
Choong added S P Setia was committed to navigating the challenges presented by a volatile global economy with a measured and strategic approach that keeps the company at the forefront of industry innovation and market leadership.
“It is also heartening to see our efforts bear fruit on the international stage.
“We are pushing our expansion ambitions while exercising caution and keen market insight,” he said.
In conjunction with S P Setia’s 50th anniversary in 2024, the company will continue to carry out various sales and marketing campaigns as well as customer engagement programmes throughout the year in an effort to further boost its sales numbers.
A property analyst told StarBiz that as Malaysia’s economy continues to gather pace, the sector would be an important barometer of growth.
“As we can see in China over the past two years, its property industry has been lacklustre, although at present its government is doing everything to give the sector a boost,” he said.
With Bank Negara set to release 1Q24 gross domestic product numbers today, the analyst said high frequency indicators are projecting improved growth for the economy, and this would be good news for the property sector and companies such as S P Setia.
“Moving forward, we do believe the outlook is positive for groups like S P Setia, with the most obvious risk on the horizon being how the public would deal with the fuel subsidy rationalisation that is forthcoming, which may dampen demand,” he said.
Throughout its history, S P Setia has established a presence in Malaysia’s key economic centres, namely, the Klang Valley, Johor Baru, Penang and Sabah.
Moreover, it has also expanded its international footprint with notable projects in Vietnam, Australia, Singapore, China, the United Kingdom and Japan.
