SP Setia plans RM3b launches in H2

> Property developer says worst is over, optimistic of achieving 2017 sales target

KUALA LUMPUR: SP Setia Bhd, which expects the property market to improve, has planned RM3 billion worth of launches for the second half of the year (2H’17) based on the positive outlook.

“The worst is over. We see the market coming up but whether it will come up in a strong way or not, that depends a lot on sentiments. We find that actually it has bottomed out,” president and CEO Datuk Khor Chap Jen told reporters at a briefing yesterday.

He said the group is optimistic of achieving the RM4 billion sales target for the year, driven by launches planned in the Klang Valley and Johor, most of which will be mid-range landed properties where demand is still strong.

For the first half ended June 30, 2017 (1H’17), the group raked in sales of RM2.07 billion, of which RM1.08 billion (52%) were from domestic projects and RM996.5 million (48%) were from international projects.

“For this year’s RM4 billion, we actually targeted 20% international sales. If you look at 1H’17, international sales has already contributed 20% of RM4 billion so for international, we have met the year’s target. For 2H’17, we will concentrate more on local,” Khor said, adding that the local market is typically stronger in the second half of the year.

Meanwhile, deputy president and COO Datuk Wong Tuck Wai said Phase 2 of the Battersea Power Station in London has seen some cost increase.

“It is bigger than anticipated or what was originally planned. When we first acquired the land in 2012, there was a cost based on those times. Now we are in 2017, of course the cost will increase a bit due to inflation, design and building envelope. Everything else is very much under control,” he said.

To mitigate the cost increase, the group changed the procurement strategy from design and build contract to construction and management contract for Phases 2 and 3.

Wong said 40% of Phase 2 has already been contracted out while the remaining 60% will be contracted out under the new procurement strategy. He said a budget has been set for the anticipated overall cost of Phase 2 but declined to reveal details.

As for Phase 1, the handover process is at 50% and is expected to be completed by end of August while in Phase 3, tunneling works are already underway for the construction of the London Underground’s Northern Line Extension.

On the acquisition of I&P Group Sdn Bhd, executive vice-president and CFO Choy Kah Yew said it is in the process of obtaining Bursa Malaysia’s approval for its circular, which will be sent out to shareholders within a month.

“We anticipate that the EGM should be held some time in October,” he said. The exercise is on track for completion by yearend.

In the second quarter ended June 30, 2017, SP Setia’s net profit rose 8.38% to RM136.32 million from RM125.78 million a year ago, while revenue fell 21.57% to RM794.71 million from RM1.01 billion a year ago. For 1H’17, net profit fell 3.08% to RM241.50 million from RM249.17 million a year ago while revenue fell 9.72% to RM1.73 billion from RM1.92 billion a year ago.

The group recommended an interim dividend of 4 sen per share.

The stock closed unchanged at RM3.31 yesterday with a total of 1.55 million shares traded. Its market capitalisation stood at RM9.89 billion.