Sime Darby Property lowers sales target to RM2.3 bil in FY2023 amid headwinds

KUALA LUMPUR (March 1): Sime Darby Property Bhd (SDP) has set a lower sales target of RM2.3 billion for FY2023 due to absence of normalisation in the labour situation, rising raw material prices, looming state elections and higher interest rates.

SDP group managing director Datuk Azmir Merican said the property developer will closely monitor the market and be ready to take advantage as soon as there is recovery in headwinds.

“If you look at our sales numbers of RM3.7 billion in FY(20)22, (they) are 100% from the domestic market. This is the largest you will see in any property company. So I think we have to take that into account.

“To execute well, we need contractors and labourers. We have to watch that space. Our view is that we are already seeing labour supply normalising.

“We have to give it another three- to four months, which we will then see the situation get better. When the situation gets better, our ability to launch products at decent prices also gets better,” said Azmir at the SDP’s virtual media briefing on its 4QFY2022 financial results on Wednesday (March 1).

He said that it is “wise” to have a lower target this year, taking advantage of the developments.

“If things change for the better, we are ready to take advantage of that as well,” he added.

For the full year, SDP’s net profit more than doubled to RM315.84 million from RM146.89 million in FY2021, underpinned by profitability growth across all business segments, including contributions from the group’s land monetisation activities and disposal of non-core assets.

Its sales grew 24% year-on-year to RM3.7 billion, compared to RM3 billion in 2021.

Its industrial segment showed significant improvements, contributing 25% to overall sales in FY2022 as compared to 18% in the previous year, while sales grew by 70% year-on-year to RM907 million from RM532.5 million.

Azmir added that the property developer has also to take into account an impending state election that tends to delay approval works and dull progress momentum.

“We had to take into account for 2023, (that) there are already state elections. We deal a lot with states and there will be some disruptions. Like it or not, as people prepare for elections, people are busy.

“We will need approval and there will be some delays, which happen very often. We are in the state election year and see that (as) dulling momentum,” he added.

Azmir further said that owing to the headwinds, SDP had “brought forward some of our launches (scheduled) for 2023, to 2022”.

“That’s why we had RM3.7 billion. So now, the focus is on delivering. I think if we are breaking records, it is not so important.

“What is important now is that we have the same momentum going forward; if the market changes, I think we must be able to adapt. Once we see the labour situation normalise, then we will be more confident and have more launches. Also bear in mind that we do anticipate one or two more rate hikes this year; we have to also be vigilant of the market,” he added.

In FY2022, the group successfully delivered 1,855 units of products to its customers, while being affected by labour-related challenges and escalating material prices.

SDP said the year concluded with its highest ever post-2017 demerger operating profit of RM487.8 million; and sales achievement of RM3.7 billion, surpassing its RM2.6 billion sales target.

Bookings stood at RM1.8 billion as at Feb 5, and unbilled sales stood at RM3.6 billion as at Dec 31, 2022.

Moving forward, the group said it is proactively undertaking landbank management and monetisation activities with the proposed acquisition of up to 948 acres of land in Klang, and disposal of its non-core lands.

In the morning session on Wednesday, SDP’s share price added 2.08% or one sen to 49 sen per share, giving the company a market capitalisation of RM3.30 billion.