Sime Darby Property (SDPR) delivered a weak 3QFY21 performance as progress billings were negatively impacted by the implementation of the Full Movement Control Order (FMCO) and Enhanced MCO (EMCO) especially in the Klang Valley which saw the Group swinging into a net loss of RM15.8m during the quarter. YTD, Group net profit of RM64.7m is below our and consensus estimates at only c.29% and c.34% of full year estimates respectively. We cut our FY21 earnings by c.40% to factor in lower margins and contributions from joint-ventures and associates. YTD pre-sales secured were RM1.9bn, which met c.80% of FY21 full year sales target of RM2.4bn. Correspondingly, unbilled sales surpassed the RM2.0bn mark (at RM2.1bn) for the first time since 2018. Maintain Outperform with unchanged RM0.79 TP, pegged at c.70% to its RNAV

• 9MFY21 revenue rose 9.1% YoY to RM1.5bn, with Group profit before tax at RM147.4m, turning around from a loss before tax of RM445.5m a year ago. The Property Development segment contributed 92.8% or RM1.4bn, which is a 15.3% increase YoY mainly due to higher sales of industrial and residential products, coupled with construction progress across all its major townships in the Klang Valley and Negeri Sembilan. Elsewhere, the Investment & Asset Management segment contributed RM71.4m (+28.1% YoY) though Leisure segment’s revenue dropped 26.1% YoY to RM41.2m

• Likely to surpass FY21 sales target. We understand the Group is optimistic of exceeding the RM2.4bn sales target set for FY21, as they have already secured RM1.9bn in sales in 9MFY2. As at 7 November 2021, it has also secured bookings worth RM1.7bn. Residential landed products remains as the key sales contributor mainly from City of Elmina (RM481.1m), Bandar Bukit Raja (RM192.2m) and Serenia City (RM96.3m). Meanwhile, residential high-rise sales (c.23% of total sales) contributed mainly by KLGCC Resort (RM213.0m), KL East & Taman Melawati (RM121.7m) and Industrial segment sales (c.16% of total sales) driven by Elmina Business Park (RM201.0m). .

• To launch c.RM1.6bn in 4QFY21. The Group launched c.RM639.8m in gross development value (a total of 447 units) in 3QFY21; bringing YTD total to RM2.3bn GDV, with 2,253 units launched. In the 4QFY21, the Group has in the pipeline launches worth c.RM1.6bn, totalling FY21 launches to c.RM3.9bn. The projects, among others, include new phases in Bukit Jelutong, Bandar Ainsdale, City of Elmina, Bandar Bukit Raja 2, Serenia City & Nilai Impian – EG5, Trillia, Dayana Phase 2 & Serenia Aiora Phase 1.

Source: PublicInvest Research - 26 Nov 2021