Sime Darby Property’s (SDPR) 3QFY23 net profit came in stronger at RM144.9m (+158.2% YoY, +RM236.5%), mainly driven by gains from land sale, higher sales in residential landed and industrial products while billings also picked up speed in the Group’s major townships. In 9MFY23, Group net profit of RM276.7m (+30.1% YoY) constituted about 80% and 90% of our and consensus full year estimates. The Group also has achieved RM2.5bn sales YTD and is on track to surpass its FY23 sales target of RM2.7bn (with bookings totaling RM2.2bn as at Nov 2023). Launches in 4Q are estimated to be worth c.RM791.2m in GDV. All told, we adjust our FY23/FY24/FY25 upwards by +6%/+3%/+2% after imputing better sales performance. Unbilled sales still remain healthy at RM3.745bn, providing earnings visibility for the next 1-2 years. As for valuations, we maintain our Outperform call and TP of RM0.80 (pegged at c.45% discount to book value) given its attractive fundamentals.

• 9MFY23 property revenue rose 38.7% YoY to RM2.3bn, largely due to improved site progress and encouraging sales achieved, further supported by opening unbilled sales of RM3.6bn (vis-à-vis RM2.4bn a year ago. As such, Group’s property pre-tax profit (PBT) saw an increase of 55.0%, driven by on-site development activities in Bandar Bukit Raja, Nilai Impian, Serenia City, City of Elmina, Hamilton Nilai City and Elmina Business Park townships. Separately, KL East Mall continues to grow its occupancy rate to 89% as at 30 September 2023 compared to 79% recorded a year ago. However, the segment’s PBT was lower at RM17.9m from RM38.5m mainly due to higher share of loss from the Battersea Power Station.

• Likely to surpass FY23 sales target. Sales momentum remains encouraging with the Group appearing to likely to surpass its FY23 sales target of RM2.7bn (which was revised last quarter from RM2.3bn). In 9MFY23, it secured RM2.54bn in pre-sales. We understand that 38% or RM954.1m are from projects launched in previous years, contributed by conversion from bookings from prior year launches, and 55% or RM1,377.7m from new launches mainly from Serasi Residences, Teja in SJCC, Ilham Residence 3, The Eighth & Elmina Green 7 in City of Elmina and Nadira 3 in Bandar Bukit Raja. With about 93% of FY23 sales target in the bag, the Group is on track to surpass its FY23 sales target as the sales momentum is further supported by RM2.2bn bookings as at 5 November 2023. Launch pipeline for 4Q 2023 worth c.RM791.2m in GDV across its townships are expected to be unveiled.

Source: PublicInvest Research - 27 Nov 2023