Lower property development contribution, segment losses hit SP Setia Q1 earnings

PETALING JAYA: SP Setia Bhd’s net profit for its first quarter ended March 31 tumbled by 62% to RM28.46 million, from RM74.97 million in the same quarter of the previous year, due to lower contribution from its property development segment, bigger losses in the construction segment and loss in it other operations.

Revenue for the period fell to RM702.65 million, an 18.8% decrease from RM864.91 million reported previously.

Its president & CEO, Datuk Khor Chap Jen, said the group secured RM723 million in bookings in the first quarter of the year, and during the extended movement control order (MCO) period, it would focus on converting these booking into sales.

“The purchase of property is a relatively safe and sound investment in the medium to longer-term. Thus owner-occupiers and some investors may emerge due to attractive offerings by property developers,” he said in a press release.

Prior to the implementation of the MCO, the group had launched a number of projects with a total gross development value of RM478 million.

The group stated that the property industry has not been spared from the impact of the pandemic and that the anticipated recovery will not happen so soon. Some form of contraction is expected, but as the property industry has already been facing strong headwinds for the past few years, the contraction is more likely to be buffered rather than a steep decline.

SP Setia outlined that recovery of the property industry will largely depend on the improvement of the broader economy and also the buyers’ sentiment, which for now, remains weak as many are adopting a wait-and-see attitude.

As such, the group has revised its sales target for FY20 to RM3.8 billion from RM4.55 billion, to reflect the present market conditions.

“The outlook for FY2020 remains challenging and uncertain as the full impact of the Covid-19 pandemic has not been ascertained. However, the group remains resilient as unbilled sales totalling RM9.8 billion will place the group in good stead during this challenging time and see the group through over the next two years,” said Khor.

source https://www.thesundaily.my/business/lower-property-development-contribution-segment-losses-hit-sp-setia-q1-earnings-AK2408839