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Property developer to ramp up launches in late 2018
International Trade and Industry Minister Datuk Seri Mustapa Mohamed (fourth from left) officiating at the launch of the new Perodua Myvi. With him are Perusahaan Otomobil Kedua Sdn Bhd chairman Tan Sri Asmat Kamaludin (third from right) and CEO Datuk Dr Aminar Rashid Salleh (second from left). — Bernama >
SHAH ALAM: Property developer SP Setia Bhd will be reviewing its operations over the next few months, following the acquisition of I&P Group Sdn Bhd from Permodalan Nasional Bhd (PNB).
SP Setia president and chief executive officer Datuk CJ Khor said the company will ramp up launches in late 2018 and from 2019 onwards – once the review process has been completed.
“The first thing that we’re going to do is review all the plans that they (I&P) have. We definitely want to add value,” he told reporters after the company’s EGM.
“We think we can add value as some of their land is very strategic, so this is what we are going to be focusing on over the next few months.”
After the review phase has been completed, Khor said the next step would be to “push the execution.”
“So there’s going to be a lot of planning. Then, in the second half of 2018 and into 2019, we will be rolling out a lot of projects.”
Khor said the current property market slowdown was another reason why the company will take its time to launch projects.
“We believe that the market has hit the bottom and that it will pick up in 2018. Whether it will quick or slow, will depend on catalysts.
“Most people are holding back in anticipation of the upcoming general election. It is likely that things will improve after that. Currently, the market is quite flat, but we still see demand.”
Shareholders approved the acquisition of sister company I&P Group Sdn Bhd for RM3.65bil in cash, which will enable SP Setia to almost double its landbank and fast-track its expansion plans.
The purchase consideration was arrived at on a willing buyer-willing seller basis after taking into consideration I&P’s adjusted unaudited consolidated net assets of
RM6.01bil.
The I&P group, a township developer, has landbank of about 4,276 acres located in the central part of Klang Valley and Johor Baru. Acquiring I&P will boost SP Setia’s landbank by 83% to 9,417 acres.
“It’s a synergistic acquisition. I&P is in the Klang Valley and Iskandar Malaysia (Johor), where we have a strong presence. They have projects next to us, so the acquisition provides us with more landbank,” said Khor.
“I&P have about 350 staff and they have all been focusing on township developments. In our bid to expand, we need people.
“We need good, experienced people... and there is a ready pool there.”
Separately, Khor said SP Setia intends to maintain its sales target of RM4bil next year. The company has a sales target of RM4bil for the current financial year ending Dec 31, 2017. “We will not do less than this year,” he said. SP Setia’s net profit in the third quarter ended Sept 30, 2017 jumped 89% to RM253.22mil from RM134.07mil a year ago, spurred by higher contributions from its property development division.
However, revenue in the third quarter dropped to RM842.49mil from RM1.26bil a year earlier, weighed down by lower earnings from the property development and construction segments.
For the nine-month period ended Sept 30, 2017, SP Setia’s net profit increased to RM494.72mil from RM383.24mil in the previous corresponding period, while revenue dropped to RM2.58bil from RM3.19bil a year earlier.
The company achieved sales of RM2.82bil for the nine months ended Sept 30, 2017.