SP Setia 1Q net profit down 62% as MCO hits property, construction segments

SP Setia president and chief executive officer Datuk Khor Chap Jen

SP Setia president and chief executive officer Datuk Khor Chap Jen

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KUALA LUMPUR (May 14): Property developer S P Setia Bhd saw its first-quarter net profit drop 62% year-on-year (y-o-y) on lower earnings from its property development and construction segments, partly due to the Movement Control Order (MCO), which led to closure of sales offices, construction sites and social activities, resulting in disruptions to the operations of its businesses.

Net profit for the three months ended March 31,2020 (1QFY20) fell to RM28.46 million from RM74.98 million a year ago. As a result, it posted a loss per share of 0.93 sen for 1QFY20 compared with an earnings per share of 0.22 sen for 1QFY19.

Quarterly revenue also declined 18.8% y-o-y to RM702.66 million from RM864.91 million in 1QFY19.

In a bourse filing today, SP Setia said the property development segment for 1QFY20 posted a 27.2% y-o-y decline in pre-tax profit to RM106 million, while its construction segment widened its pre-tax loss to RM1.21 million from RM970,000 a year ago.

As the group expects economic activities to take some time to recover, it is revising its sales target for the full year ending Dec 31, 2020 (FY20) to RM3.8 billion, from RM4.55 billion previously.

“The outlook for FY20 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 SP Setia president and chief executive officer Datuk Khor Chap Jen in a separate statement.

Prior to the start of the MCO, the group had launched projects worth about RM478 million of gross development value (GDV), all in the Klang Valley area. Khor said it had witnessed good responses from prospective buyers of these projects where the take-up rates had been most encouraging.

"Moving forward, other than focusing on clearing the completed inventories, the group will remain prudent with limited new launches concentrating on the mid-range landed units in established townships to cater to the demand of owner-occupiers.

"The group is also anchored by 48 ongoing projects and an effective remaining land bank of 8,718 acres with a GDV of RM138.87 billion as at March 31, 2020."

Shares in SP Setia closed 1.9% or 1.5 sen lower at 77.5 sen today, giving it a market capitalisation of RM3.13 billion. It saw 5.75 million shares traded.