Sime Darby Property Treads Lightly on Property Sector
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Due to major uncertainty in current market conditions, Sime Dary Property Bhd has decided to adopt a cautious stance on the near-term outlook for the local property sector.
Group chief financial officer Datuk Tong Poh Keow had stated that more clarification is necessary for the implementation of the sales and service tax (effective next month). Buyers are also maintaining a wary approach to the situation, opting to “wait-and-see” before making any decisions.
“There is also an oversupply of high rise medium range properties. The industry is producing faster than the absorption rate,” she said at a briefing on the company's fourth-quarter earnings.
Sime Darby Property's objectives for 2018 include the launching of 1,500 units in total, which is equivalent to a combined gross sales value of RM1.1bil focused heavily on properties within the RM400,000 to RM850,000 price range.
The company's net profit for its fourth quarter ended June 30 of 2018, dropped by 86% RM46.57mil from RM327.66mil in the previous corresponding period. Concurrently, its revenue in the fourth quarter also declined to RM617.37mil from RM1.14bil a year earlier.
Sime Darby Property's net profit for the financial year ended June 30, 2018, however, has grown to a steady RM640.01mil from RM624.03mil in the previous corresponding period, while revenue decreased to RM2.35bil from RM2.61bil a year earlier.
The company's recent filing with Bursa Malaysia noted that contributions from property development decreased by 38.2% compared to last year. This previous year's results have included gains on compulsory acquisition and disposal of land of RM468.8mil, whilst the current year included a gain on disposal of land of RM87.6mil.
Sime Darby Property registered a core operating profit for the current year with a marked increase of 161%. Higher sales and development activities at Elmina West, Elmina East, Serenia City, Bukit Jelutong townships, Cantara Residences and Serini Melawati contributed largely to this, in spite of the lower contribution from Nilai Utama, Nilai Impian and Bandar Bukit Raja townships.