Sime Darby Property (SDPR) swung back to black with Group 4QFY21 net profit rebounding to RM72.2m as all business segments showed improvements. Group FY21 net profit of RM136.9m constitutes 102% and 103% of our and consensus full year estimates. The property development segment contributed 93.2% of total revenue (+7.7% YoY), mainly driven by effective end-to-end online sales, strategic new launches, unsold inventories clearance, Home Ownership Campaign (HOC) and low interest rates. Pretax profit (PBT) improved by >100% YoY partly due to lower share of losses from JVs and associates of RM24.2m (FY2020: RM57.3m after excluding impairment recognised by Battersea Group of RM337.1m). SDPR clinched RM3.0bn worth of presales in FY21, which surpassed its FY21 sales target of RM2.4bn. Unbilled sales rose 50.0% YoY to RM2.4bn, ensuring a healthy income visibility for the next three years. We maintain our Outperform call with unchanged RM0.79 TP, pegged at c.70% discount to its RNAV

• FY21 revenue rose 7.6% YoY to RM2.2bn, driven by improved property development performance (higher residential and industrial sales, and progressive development activities) and improved performance from other segments. Revenue generators are mainly from: (1) higher new sales and progressive development activities in City of Elmina, Elmina Business Park, Bukit Jelutong, Bandar Ainsdale and KLGCC Resort; (2) higher sales of completed stocks in KL East, KLGCC Resort, Melawati and Planters’ Haven. We understand that completed inventories fell to a new low of ~RM330m from FY20’s of ~RM574m. .

• To launch RM2.8bn worth of properties in FY22 with RM2.6bn sales target. The Group intends to unveil RM2.8bn (~81% residential, ~16% industrial) in GDV in FY22. In 1QFY22, the Group will launch new residential landed products with a GDV of RM571m in the City of Elmina, Bandar Bukit Raja, Serenia City, Bandar Ainsdale, Nilai Impian and KL East; and high-rise products with GDV worth RM156m in Putra Heights. Meanwhile, we understand that it targets maiden contribution from the industrial development fund in partnership with LOGOS Property in 2HFY22. Separately, its Battersea Power Station project is said to have achieved ~£400m sales in FY21 in line with property completion and handover. Also, about 84% commercial spaces in the Power Station (Ph 2) have been successfully let out. The Power Station (Ph 2) is targeted to be officially opened in September which coincides with the opening of the first part of the Electric Boulevard retail component (Ph 3A) which, once completed, will have more than 40 retailers and F&B operators.

Source: PublicInvest Research - 25 Feb 2022