Sime Darby Property’s (SDPR) profit momentum continued into 4QFY23, with the Group netting RM131.3m (+27.2% YoY, -9.4% QoQ), which beat both our and consensus estimates. For FY23, Group net profit of RM408.m (+29.2% YoY) continued about 111% and 115% of our and consensus full year estimates attributed to gains from non-core land sale, higher sales in residential landed and industrial products. Elsewhere, SDPR achieved RM3.3bn in sales, surpassing its RM2.7bn sales target by some 22%. Unbilled sales remain healthy at RM3.6bn, underpinning earnings visibility for the next three years. Completed inventories stood at RM390.3m in GDV. All told, we adjust our FY24/FY25 upwards by +5%/+3% on higher margins imputed. As for valuations, we maintain our Outperform call but increase our TP from RM0.80 to RM0.90, after narrowing our discount to book to 40% (from c.45% discount to book value previously) given its attractive fundamentals.

• FY23 property revenue rose 26.9% YoY to RM3.24bn, driven by healthy unbilled sales pipeline, strong sales contribution from residential and industrial products, along with increased on-site development activities in Bandar Bukit Raja, Nilai Impian, Serenia City, Elmina Business Park and Hamilton City townships. The group also disposed non-core land located in Negeri Sembilan and Kedah which lifted margins during the year. It launched products worth RM4.0bn in FY23, and we understand that its residential landed and high-rise products recorded average take-up rate of 73%. Its FY23 sales of RM3.3bn comprised a diversified product mix, including residential landed 36%, high-rise residential 27%, and industrial products 31%.

• Sets FY24 sales target of RM3bn. The Group announced an RM3.0bn sales target and plans a launch pipeline worth RM3.9bn in GDV for FY24, with about 30% product mix across residential landed, high-rise and industrials. The key projects, among others, include industrial products (Bandar Bukit Raja, Elimina Business Park, Serenia City, Bandar University Pagoh and Nilai Impian), residential landed (City of Elmina, Bandar Bukit Raja, Serenia City, Nilai Impian and Bandar Ainsdale) and residential high-rise (KL East, KLGCC Resort, Elmina West and Putra Heights). For 1QFY24 alone, the Group is launching projects worth about RM954m.

Source: PublicInvest Research - 26 Feb 2024