KUALA LUMPUR, Feb 28 — Sime Darby Property Bhd expects to be profitable in the first quarter ended March 31, 2019, contributed mainly by the disposal of Darby Park Executive Suites in Singapore, says group managing director Datuk Seri Amrin Awaluddin.
The company had entered into a sale and purchase agreement to dispose of its hospitality asset in the island state for S$93 million (RM280.3 million).
It registered a gain of S$67.3 million following the disposal.
“The disposal was completed on January 31, so that is going to be the main contributor for our first quarter results,” he told reporters when announcing results for the financial period 2018 (FP 2018) and second quarter ended Dec 31, 2018.
The company has changed its financial year end from June 30 to December 31.
Amrin also said the company had signed an agreement for the sale of its 121.41 hectares of land in Kedah to Zheijiang XSD Holding Group Co Ltd for RM88.9 million, November last year.
The transaction is expected to be completed in the second quarter of this year.
Meanwhile, as part of its long term plan, Sime Darby Property is venturing more into the industrial park with its plan to develop industrial and logistic areas namely in Bandar Bukit Raja and Serenia City.
“For the development of our recurring income, we have started with Japan’s Mitsui & Co and Mitsubishi Estate Co Ltd to develop and managed industrial park in Bandar Bukit Raja.
“This will allow us other than monetise and develop our township, it also creates an asset for rental income for the long term. This means we are expanding our revenue source, from purely residential and property sales into revenue generation,” he explained.
As a matured property company, he noted that Sime Darby Property should have a portfolio of revenue sources.
“So this would be our medium to long term strategy. We set a target that by 2020, 10 per cent of our pre-tax profits will be from recurring income, which is from rental and property investment.
“By having this in place we will be able to withstand any property cycle… when the property cycle is good it is easy to sell to sell the property but if the cycle is poor it is challenging, therefore, you need recurring income to sustain your revenue and to support your revenue.”
Asked if the stamp duty exemption announced by the government in the 2019 Budget provided any support for the company, Amrin replied: “It is still early to indicate on that and a good test would be starting tomorrow when the Prime Minister Tun Dr Mahathir Mohamad launch the National Homeownership.”
The campaign is expected to address the high number of unsold houses in the country, featuring some 30,115 completed houses.
Currently, Sime Darby Property’s total landbank stood at 8903. 08 hectares and the company has no intention to increase it.
Yesterday, Sime Darby Property Bhd reported a net loss of RM318.70 million for the six-month financial period ended Dec 31, 2018 (FY18) against a net profit of RM559.77 million recorded in 2017.
The net loss was due to high impairment of inventories, negative contribution from the Battersea Power Station project in London and a higher tax provision during the period under review.
Despite slipping into the red, its revenue increased 7.9 per cent to RM1.27 billion during the period under review from RM1.18 billion a year earlier, thanks to the improved performance of its property development and concession arrangement segments. — Bernama
