KUALA LUMPUR (Aug 23): Three months after expressing confidence that its RM4 billion property sales target for the current year is achievable, S P Setia Bhd today lowered the figure to RM3.5 billion.

President and chief executive officer Datuk Khor Chap Jen cited global uncertainty, especially in the aftermath of Brexit, and continued weak sentiment in the Malaysian property market, for the downward revision.

Khor had told the media after the group’s annual general meeting on May 18 that the group was confident of achieving RM4 billion in sales for the year ending Dec 31, 2016 (FY16), by being selective of projects it chooses to pursue.

However, in a statement today to announce S P Setia’s second quarter results, Khor mentioned the lower sales target.

“In view of the challenging environment ahead, the group is cautiously optimistic and remains resilient with its diversified range of new launches, ranging from affordable to up market, and landed to apartments in the second half of the financial year,” he said.

Khor said the group’s prospects remain positive with total unbilled sales of RM8.2 billion, anchored by 29 ongoing projects and effective remaining land bank of 3,805 acres, with a gross development value (GDV) of RM71.5 billion as of June 30.

S P Setia reported a net profit of RM125.78 million for the second financial quarter ended June 30, 2016 (2QFY16), on the back of a revenue of RM1.01 billion.

For the first half of the year (1HFY16), the group reported a net profit of RM249.17 million, on revenue of RM1.92 billion.

The group did not provide comparison figures, as it changed its financial year end from Oct 31 to Dec 31, and made up its financial statements for the 14 months period ended Dec 31, 2015.

“Consequently, the 2015 quarterly financial reporting periods do not correspond with the 2016 quarterly financial reporting periods, and the 2015 quarterly results do not form a proper basis for comparison with the 2016 quarterly results,” it said in its filing to Bursa Malaysia.

The group has proposed an interim dividend of 4 sen per share, to be paid on a date to be determined later.

S P Setia said for the seven-month period ended July 31, the group achieved sales of RM1.35 billion, with RM1.11 billion sales secured for 1HFY16.

“The sales secured are largely from central region with RM856 million; southern, northern and eastern region combined with RM140 million; and international region with RM109 million.

“On the local front, the sales secured in Klang Valley are mainly in line with the group’s sales target, as compared to a weaker sentiment in Johor, Penang and Sabah,” the group said.

Ongoing projects which contributed to the achieved revenue and profit include Setia Alam and Setia Eco Park in Shah Alam, Setia EcoHill in Semenyih, Setia Eco Glades in Cyberjaya, Setia Sky Residences at Jalan Tun Razak, KL Eco City at Jalan Bangsar, Aeropod in Kota Kinabalu, Bukit Indah, Setia Indah, Setia Tropika, Setia Eco Cascadia, Setia Business Park II, Setia Eco Gardens and Setia Sky 88 in Johor Bahru, Setia Pearl Island, Setia Vista, Setia Pinnacle and Setia V Residences in Penang and Eco Sanctuary in Singapore.

“It is noteworthy to mention that amidst the current challenging market, S P Setia’s sales performed satisfactorily, with an admirable 100% take up rate of the GDV RM272 million landed properties launched in Setia Eco Templer at Selayang in May 2016,” said Khor.

“The Setia EcoHill 2 at Semenyih achieved an encouraging 72% take up rate for its Everna cluster semi-detached homes, during the recent launch in June 2016.

“This indicates that the underlying demand for quality properties in strategic locations with good infrastructure, secure and self-sustained townships, is still there,” he said.

S P Setia’s upcoming major launches include the Maison at Carnergie in Melbourne, Australia, which has a GDV of AUD 32 million(RM98.6 million); the ViiA Residence at KL Eco City with a GDV of RM407 million; the Setia Sky Ville at Jelutong, Penang, with a GDV of RM453 million; the Setia Sky Seputeh (Tower A) at Taman Seputeh with a GDV of RM458 million; and Trio by Setia (Tower 1) at Bukit Tinggi, Klang, with a GDV of RM220 million.

The group will also continue to focus on midpriced range landed properties in Setia Alam, where 517 units of 2-storey terrace, 3-storey terrace and 3-storey semi-D with a GDV of RM384 million are earmarked for progressive launching, over the second half of the year.

S P Setia will also launch 900 units of Rumah Selangorku in Setia Eco Templer, with a GDV of RM155 million; as well as 490 units of Rumah Mampu Milik in Setia Business Park II at Johor, with a GDV of RM74 million.

These product launches are in line with the group’s strategy of launching more affordable and mid-priced range housing.

“We are confident that the strategic list of launches lined up for the second half of the year, which ranges from affordable housing to exclusive niche developments, will have good responses, keeping up with the momentum from the take up rate of recent launches,” said Khor.

In June, the group had announced a rights issue exercise which is expected to raise gross proceeds of about RM1.1 billion to fund the its current working capital requirements, as well as for future property development and expansion plans.

S P Setia’s shares closed unchanged at RM3.25 today, for a market capitalisation of RM9.16 billion.