KUALA LUMPUR (May 13): Affordable property player Hua Yang Bhd, is confident it would be able to achieve its lower annual sales target of RM400 million in the financial year ending March 31, 2016 (FY16), and that its performance — due to be released before the end of the month — will be comparable to FY15.

The group's net profit rose 34.55% to RM110.56 million in FY15, as revenue increased 14.45% to RM583.58 million from 509.89 million a year prior.

Hua Yang has already seen its net profit increase 9.73% to RM88.73 million in the first nine months ended Dec 31, 2015 (9MFY16) from RM80.86 million in 9MFY15, on the back of a 3.87% increase in turnover to RM448.17 million from RM431.46 million. As at Dec 31, 2016, its unbilled sales stood at RM530.53 million.

However, the company's property development segment saw its revenue and profit before tax dip 0.3% and 7% respectively in 3QFY16 to RM154.44 million and RM39.82 million, compared to the previous year's corresponding quarter, due to lower sales achieved.

Notwithstanding the bleak outlook for the property mart, the group remains optimistic on its prospects for FY17, as demand for affordable housing remains strong.

"We have achieved new sales of RM255.4 million as of 3QFY16 (third quarter of financial year 2016). Sentiment towards the property sector remains soft mainly due to the current uncertain economic environment.

"Nevertheless, our projects continue to draw buyer's interest, underscoring the positive demand for affordable housing, which remains the primary focus of the group," said Hua Yang chief executive officer Ho Wen Yan.

However, the company is also cautious moving ahead and has deferred the launch of its Astetica Residences (Mines South) project, which carries a gross development value (GDV) of RM368 million, to the second half of financial year 2017 (2HFY17) in view of the challenging property market outlook.

Ho said he is optimistic of the affordable market's performance this year, propped up by pent-up demand from first home buyers.

"We do expect the residential segment to drive the property market this year, especially products priced approximately RM500,000 due to pent-up demand from first-time home buyers," he said.

"This is backed by the fact that about 42% of the country's population are between the ages of 25 and 54, which is considered the house-buying age," he added.

So far this year, Hua Yang has launched its Citywoods (Tower A) in Johor, comprising 170 units of serviced residents, in January and Ridgewood (Phase 2) in Perak, comprising three-storey cluster semi-detached houses, three-storey link bungalows and bungalows, in February.

The company will also be launching Phase 2 of Seri Andaman in Perak next year.

The company recently announced that it will be acquiring Grand View Realty Sdn Bhd for RM75.6 million in a bid to acquire the 73.2 acres (29.6ha) of freehold land adjacent to Kota Masai, Johor, owned by Grand View Realty. Hua Yang wants to set up an affordable township on the land.

Ho said plans are on-track for the development and the proposed acquisition is expected to be completed by first quarter of the financial year 2017.

He said the company plans to develop eight phases of mixed developments throughout the landbank that will include cluster homes, semi-detached homes, shop offices and homes under the Johor affordable housing scheme, amongst others.

For FY17, Ho did not discount that the challenges prevalent in the market now to continue into the new financial year, while competition intensifies in the affordable property segment.

"While we do not expect many developers who have established a strong presence in the high-end segment to enter into the affordable housing segment, the competition will likely come from new entrants to the market, both local and foreign," he said.

Nevertheless, he is optimistic Hua Yang's projects and product offerings will continue to do well despite the difficult outlook moving forward, due to resilient demand for quality and affordable homes, especially those that cater to the middle income and younger market segment.

"That (demand) will continue to increase at a rapid pace as a result of continued economic progress and urbanisation," he added.