S P Setia registers lower 2QFY2023 earnings on higher finance costs, forex losses

KUALA LUMPUR (Aug 16): S P Setia Bhd’s net profit declined 46% for the second quarter ended June 30, 2023 (2QFY2023) as increased finance costs and foreign exhange losses offset the group’s higher gross profit.

In a filing to Bursa Malaysia on Wednesday (Aug 16), it said earnings fell to RM43.06 million or 1.06 sen per share in 2QFY2023, from RM80.09 million or 1.97 sen per share a year ago, as finance costs rose 57% to RM94.1 million from RM60.01 million over the same period.

During the quarter under review, S P Setia also booked an unrealised foreign exchange loss of RM17.53 million versus a forex gain of RM8.12 million a year ago.

These downsides offset the group’s operational efficiencies, which saw gross profit rise 13% to RM311.29 million in 2QFY2023 from RM275.92 million in the previous corresponding quarter, despite revenue declining 7.4% to RM942.72 million from RM1.02 billion.

S P Setia said its 2QFY2023 earnings were also weighed by lower contributions from Singapore and the central region of Malaysia.

For the first half of the year (1HFY2023), the group’s net profit fell by 33% to RM98.51 million from RM147.59 million in the previous corresponding period, while revenue inched up 1.3% to RM1.91 billion from RM1.89 billion.

In a separate statement, S P Setia said it has secured total sales of RM2.56 billion for 1HFY2023, equivalent to 60% of its FY2023 sales target.

“On top of that, the group has secured total bookings of RM470 million as at June 30, 2023. With the strong bookings in the pipeline, the key focus is to convert these bookings into sales in a timely manner,” it said.

S P Setia currently has 44 ongoing projects and unbilled sales totalling RM6.82 billion as at June 30, 2023, giving it earnings visibility in the short to mid-term.

“Therefore, and notwithstanding a global growth outlook weighed down by persistent inflation and higher interest rates, the group is optimistic of achieving an overall satisfactory performance for FY2023,” it said.

S P Setia has an effective remaining land bank of 6,870 acres with a total gross development value of RM125.77 billion as at June 30, 2023.

It said efforts to monetise non-strategic land and divest non-core assets continue, with income generated from the disposals of land expected to help reduce its gearing level and improve the group’s financial position.

Nonetheless, the group said it will continue “to pursue future growth opportunities amidst the challenging interest rate environment”.

In June and July 2023, S P Setia announced the disposals of 500 acres of land in Selangor for a consideration of RM392 million, and another eight parcels of land measuring 959.7 acres in Tebrau, Johor for a consideration of RM548 million.

“Through the group’s disciplined debt reduction programme and de-gearing roadmap implementation across all its business units, the net gearing level of the group has been reduced to 0.55x and is expected to improve further progressively,” it said.

Shares of S P Setia were trading 1.5 sen or 2.0% higher at 78 sen at market break, valuing the real estate developer at RM3.18 billion.