KUALA LUMPUR (Aug 28): Sime Darby Property Bhd is targeting its recurring income segment to contribute up to 10% from its profit before interest and tax (PBIT) by 2022 or 2023 as part of the group’s strategic pillars to grow recurring income, according to group chief financial officer Datuk Tong Poh Keow.

“We have kickstarted this with the industrial park that we did with Mitsui, [so now] we are looking at some other industrial parks with big players. Pagoh Education Hub comes in very well because it has already matured with one full year of operation,” she told reporters at a media briefing today after releasing the group’s earnings results for the fourth quarter ended June 30, 2018 (4QFY18).

Tong was referring to Sime Darby Property’s joint-venture with Japan's Mitsui & Co Ltd and Mitsubishi Estate Co Ltd to develop an industrial park in the Bandar Bukit Raja township in Klang, Selangor. Besides that, part of its recurring income stream is from the 506-acre Pagoh Education Hub (PEH) in Bandar Universiti Pagoh, which contains four institutions of higher education — Universiti Tun Hussein Onn Malaysia, Universiti Islam Antarabangsa Malaysia, Universiti Teknologi Malaysia and Politeknik Tun Syed Nasir.

During FY18, recurring income contributed RM66 million or 9% to the profit before tax, out of the total of RM728.38 million.

In 4QFY18, Sime Darby Property’s net profit plunged 85.8% to RM46.57 from RM327.66 million in the same quarter last year, mainly due to lower contributions from property development activities.

The property development segment reported a profit of RM20.7 million during the quarter compared with RM274.4 million in 4QFY17. The decrease in net profit was also contributed by the share of losses from its Battersea project of RM8.8 million and the fact that previous year’s results included the gain on disposal of Glengowrie Estate of RM209 million

Quarterly revenue fell 45.8% to RM617.36 million from RM1.139 billion in 4QFY17.

The board of directors has declared a second interim single tier dividend of 3 sen per share payable on Oct 26.

For the full FY18, the group’s net profit remained flattish at RM640.01 million against RM624.03 million last year, despite revenue declining 9.9% to RM2.353 billion from RM2.611 billion.