Sime Darby Property group managing director Datuk Seri Azmir Merican.
PETALING JAYA: Sime Darby Property Bhd
(SimeProp) is on the lookout to acquire new assets in a bid to grow its recurring income, says group managing director Datuk Seri Azmir Merican, adding that the assets will need to be of a certain quality.
“We like quality assets, especially spaces that we are very familiar with.
“We are looking at things we are currently not doing, but could potentially have an impact if we get it right. So these are key to us.
“We are executing our strategy well and that’s translating,” he said during the group’s nine-month performance announcement virtually yesterday.
According to Azmir, the group is also in talks with its sister company, SD Guthrie Bhd, for collaboration purposes.
“We are looking for opportunities to collaborate in developing Carey Island, Selangor. We’re in talks with them, but I think it is a bit too early for me to speculate.
“So we’ll have to wait until an announcement is made,” he said.
The group recorded an all-time high nine-month performance in terms of revenue, operating profit and pre-tax profit.
Azmir said revenue increased 35% to RM3.27bil from RM2.42bil previously on the back of strong sales and financial progress across major townships such as Bandar Bukit Raja, Serenia City, Kuala Lumpur Golf & Country Club Resort, Nilai Impian and Elmina Business Park.
Increased site progress within the property development (PD) segment and growing revenue contribution from the investment and asset management (IAM) and leisure segments also boosted the group’s financial performance.
The IAM segment posted a strong 22% year-on-year increase in revenue, reaching RM95.8mil while the newly opened Elmina Lakeside Mall also began contributing to revenue, enhancing the segment’s prospects.
He added that the nine-month sales stood at RM3.2bil, achieving 91% of the group’s yearly sales target.
He also said gross margin has been healthy at 33%.
“Sales were led by the industrial sector at 32%, followed by the high-rise segment at 30% and landed at 21%. Commercial development consisted of 14%.
“Another important factor is, of course, the bookings and unbilled sales. Both are very healthy at RM1.9bil and RM3.7bil, respectively,” he noted.
Additionally, the take-up rate for products across the group came in at 76%, whereby landed properties had a 80% take-up rate with high-rise at 69%.
“Industrial is at 74% and commercial at 96%. So really, we are absolutely happy with the take-up rates. It shows that the market is receptive to the products that we launch,” he noted.
Profit for the nine months was up 50% to RM413mil while its cash position ballooned to RM790.7mil as at Sept 30, 2024.
However, for its third quarter ended Sept 30, 2024, the group posted a lower profit of RM128.2mil compared to the RM144.9mil recorded for the same quarter a year ago.
Azmir said the group is not at all concerned about the lower profit because quarterly performances are never a strong concern for the firm.
“We have a plan for 12 months, a quarter is three months so you can never manage a company based on quarters.
“Three months are never a good measure, so there’s nothing for us to worry about and nothing for us to improve on. We have already achieved a record-high performance,” he said.
Meanwhile, RHB Investment Bank Bhd said the developer’s sales momentum remained strong and it would maintain its “buy” call with a target price (TP) of RM2.20.
It also noted it would maintain its earnings forecast, as unbilled sales were the same as the previous quarter – at RM3.7bil.
As for the drop in its profit for the third quarter, the research house said it was largely due to the disposal of non-core land in Elmina and Lembah Acob in Selangor, which was recognised in the previous quarter.
“Revenue for its investment and asset-management division grew 30% quarter-on-quarter as the occupancy rate at KL East Mall improved to 98% from 96% in the second quarter of 2024, and Elmina Lakeside Mall was opened in August,” it said.
Kenanga Research said the nine-month results beat expectations, evident by its profit doubling, adding that the unbilled sales will support its earnings visibility for the next five years.
“The outlook for its bread-and-butter residential and industrial products remains positive. In the third quarter, total sales were RM1bil, and the group achieved 91% its financial year 2024 (FY24) sales target of RM3.5bil, and as of Oct 31, 2024, overall bookings hit RM1.9bil,” Kenanga Research said.
The research house said it will raise its FY24 and FY25 earnings forecast by 20% and 16%, respectively, to reflect the expectations of better sales.
“In addition to the earnings adjustment, we lift our TP by 16% to RM1.58 from RM1.36 as we reflect the improved realisability of its gross development value and recalibrate our net present value estimates while reducing our discount to revised net asset value to 50% from 55% (aligned with the industry average),” it added.
The research house favoured the developer because of its diversified portfolio which reduces dependency on high-rise development.
“The developer also has a strong foothold in matured townships, and proactive initiatives to boost recurring income via strategic investments.”
