This article first appeared in The Edge Financial Daily on March 1, 2018
KUALA LUMPUR: Selangor Properties Bhd, which kicked off its financial year 2018 (FY18) with the first quarter in the red, still expects to deliver “stable” profit and revenue growth for the year, after stripping off the impact of foreign exchange (forex), currency fluctuation and fair value gains.
“Forex risks aside, we would be on track to deliver stable profit and revenue just like what we did last year (FY17). For overseas investment, we would likely see forex fluctuation, but in terms of other segments like property investment and property development, the income and profit level should remain the same,” said Selangor Properties finance director Lee Tart Choong.
Lee said the group benefited from a weaker ringgit last year and registered a forex gain of RM17.7 million. However, this year there would be some reversal of gains as the ringgit continues to strengthen.
The group incurred a net loss of RM40.94 million in the first quarter ended Jan 31, 2018 (1QFY18), against a net profit of RM44.05 million a year ago, as it booked an unrealised forex loss of RM52.8 million for its overseas investments. It should also be noted that in 1QFY17, the group’s results included a foreign exchange gain of RM39.8 million.
Revenue-wise, the quarter saw a 6% year-on-year slide to RM28.69 million from RM30.45 million, as ringgit strengthened against the Aussie dollar in the translation of results from its Australian operations for group consolidation.
This year, the group expects the local property market to remain soft, ahead of the impending 14th general election (GE14).
Its chief operating officer Chong Koon San said the property market here, which has been soft since 2014, will see market sentiments affected by uncertainties prior to GE14.
“There are uncertainties during an election and people usually wait until it [election] settles. So this year, perhaps it (property market) will remain soft. Hopefully, towards the end of the year when election settles, it (property market) will pick up,” he told reporters after the group’s annual general meeting yesterday.
With that expectation of a firmer market later, it is planning to launch its Bukit Permata Phase 4 in Gombak in the 2Q18. It had previously deferred the launch due to the slow market.
Bukit Permata is a freehold hillside residential development sprawling across 100 acres (40.47ha). Of that, seven acres have been reserved for Phase 4. With a gross development value of RM105 million, Phase 4 comprises 36 units of semi-detached houses priced between RM1.5 million and RM1.8 million, and 24 units of bungalows priced between RM1.7 million and RM2 million.
Reassessing Wisma Damansara redevelopment
Meanwhile, Chong shared the group has also been hit by the government’s blanket restrictions on condominium developments with selling prices of RM1 million and above per unit.
“This has impacted us because our land is prime land so it is hard for us to develop lower- to medium-priced houses there. If we have to develop those houses, then we need to find cheaper land,” said Chong, but did not elaborate.
Due to the ban, the group will re-assess the development planning of the Wisma Damansara site, which it is redeveloping, to determine the appropriate time to commence construction work as well as sales launch, according to its Bursa Malaysia filing.
Further, Chong updated that the group has yet to conclude negotiations for five potential properties it is looking at in Australia.
“We have been looking at these five potential acquisitions in Australia last year but none of them is concluded yet. Whether we will get it or not, we do not know. The [properties] are: a shopping mall, a self-storage business, and three land developments,” he added.