Sime Darby Property (SDPR) registered a stronger than expected 4QFY22 net profit of RM103.2m (+64.3% YoY, +83.9% QoQ), driven by strong pre-sales and improved performance from all its business units including contributions from the Group’s land monetisation activities and disposal of non-core assets. Group FY22 net profit of RM316.1m constituted 119% and 131% of our and consensus full year estimates. During the year, it launched RM2.6bn worth of projects with average take-up rate of 89%. It achieved a record high pre-sales in FY22 (vis-àvis its FY22 sales target of RM2.6bn) at RM3.7bn, or +24% YoY as compared to RM3.0bn achieved a year ago. Unbilled sales now stands at RM3.6bn (+50% YoY). All told, we tweak our FY23/24 estimates higher by 2%/5% to account for stronger sales. Reiterate our Outperform call with unchanged RM0.70 TP, pegged at c.50% discount to its NTA.

• FY22 property revenue rose +23.7% YoY to RM2.7bn, with PBT (pretax profit) up +63.6% to RM458.9m mainly due to improved performance from all business units especially the property development segment. In FY22, property development segment results were underpinned by strong property sales of industrial/residential products and increased on-site development activities towards the end of the year. Meanwhile, the investment and asset management and leisure segment’s performance also turned around with the overall improved economic environment, post-reopening last year.

• Sold RM3.7bn in FY22. The Group clinched RM3.7bn pre-sales in FY22, or +24% higher YoY compared to the similar period the year before. It launched projects worth RM2.6bn during the year, of which 46% comprised industrial products in Elmina Business Park, Bandar Bukit Raja, and Serenia City in Selangor; Hamilton Nilai City and Nilai Impian in Negeri Sembilan; and Bandar Universiti Pagoh in Johor. We understand that residential landed products recorded a notable average take-up rate of 89%. Elsewhere, its industrial segment showed significant improvements, contributing 25% to overall sales in FY2022 as compared to 18% in FY21, while sales grew by 70% YoY to RM907.0m. As at 4QFY22, the Group’s unbilled sales soared 50% YoY to RM3.6bn with completed inventories reducing to RM351.8m, ensuring earnings visibility for the next 2-3 years.

Source: PublicInvest Research - 1 Mar 2023