S P Setia to Ramp up Home Launches

SHAH ALAM: S P Setia Bhd will be ramping up its launches and sales of properties to achieve its sales target of RM5.65bil, following a slow first quarter (Q1) performance this year.

President and chief executive officer Datuk Khor Chap Jen said it would be launching RM6.47bil worth of projects from the second quarter until the year-end.

The major launches will be in the central region, with some in the southern and northern regions. The property giant is targeting some 89% local sales and 11% international sales.

“We also have a few launches in Kota Kinabalu, while our international launches will be in Vietnam.

SP Setia only launched RM339mil worth of development projects for the 1Q period ended March 31, 2019. Revenue for the quarter was RM864mil, with a profit before tax of RM126.1mil.

While sales secured were lower than expected at RM718mil, Khor said prospective buyers have also booked over RM700mil worth of property.

“If you add it up, it comes to RM1.4bil.

“However, these people who have booked the RM700mil are cautious. They will not sign (the sale and purchase agreement) until they get confirmation of receiving a loan.

“Going forward, we would still work towards the RM5.65bil target. If we get RM1.4bil in 1Q, then we are on track. We should have a clearer picture in the second half of the year,” he said.

Moving forward, sales will be derived from new launches, existing projects and completed inventories.

Asked if the market overhang would affect SP Setia’s sales, Khor said the overhang is manageable, being less than 30% of its annual sales. It has also reduced the value of its unsold stock from RM1.6bil to RM1.4bil is less than six months.

This comprises five main projects - three in Johor, one in Penang and one in the central region.

The developer is coming up with plans to repackage and relaunch the affected projects in Johor as investment products, while the ones in Penang are larger units priced at more than RM3mil. All its smaller units have been sold out.

“In the central region, we have a project in Alam Impian.

“We had some soil settlement issue, so we held back.

The problem has been resolved and we will be putting it out in the market.

“We don’t think there is a problem because these are landed units and are in a mature location,” he said.

On SP Setia’s land bank of over 9,000ha, Khor said its average gross development value (GDV) is now over RM140bil and its sales target is around RM6bil a year, so it would last the developer for quite some time.

“There will be upcycles and downcycles when we are in township development. There is no such thing where you have over 15 to 20 periods of an upcycle.

“During good times, we can use up to 300 acres per year for a project. Slow times will only see around 30 acres a year.

“As a property developer, we will always look for opportunistic buys. We don’t close our doors because land is our raw material,” Khor said.

SP Setia’s land bank is mostly concentrated in the central region, followed by Johor, one in the northern region and around 30 acres in Penang.

Its largest one overseas is a 500-acre plot of land in Vietnam, which is for a joint venture with a state-owned agency.

Meanwhile, SP Setia is also expecting a one-year delay for the second and third phases of its Battersea Power Station Project in London, which is now targeted for completion in 2021.

Khor said there could be a marginal decline in the take-up rate to 67% from 70% for phase three, while the take-up rate for phase two is expected to be maintained at over 90%.

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