By Khairie Hisyam
SP Setia has breached the RM8 billion mark in terms of sales for FY13, almost doubling its FY12 sales figures and exceeding its actual target of RM5.5 billion for this year by about 50%.
In announcing its 4Q13 results today, the developer said it recorded RM8.241 billion in sales this year, nearly double the RM4.234 billion in sales for FY12, although its year-to-date net profit only grew by 6% year-on-year (y-o-y).
For 4Q13, SP Setia’s net profit has remained relatively static at just a 0.2% climb year-on-year (y-o-y) compared to 4Q12, despite chalking up a 17.9% y-o-y revenue increase for the quarter.
The developer recorded RM127.29 million in net profit from RM900.17 million in revenue for 4Q13 compared to RM127.02 million net profit from a revenue of RM763.62 million in 4Q12.
Overall, SP Setia’s year-to-date net profit comes to RM417.86 million, a 6% improvement over RM383.82 million recorded for the same period last year.
Revenue-wise, SP Setia saw a 21% jump in year-to-date revenue with RM3.06 billion this year compared to RM2.53 billion in 2012.
Basic earnings per share (EPS) for shareholders dropped from 20.51 sen last year to 17.93 sen per share, according to the company’s announcement.
At the noon bell, SP Setia traded at RM3.07 per share, down 1 sen.
Earnings slowdown temporary
SP Setia attributed slower increase in profits compared to revenue growth to several factors, among which is the relative infancy of its new projects both in Malaysia and overseas.
This led to a mismatch between incurred expenses and income recognition from these projects which include Eco Sanctuary in Singapore, Battersea Power Station in the United Kingdom, Parque Melbourne in Australia and Setia Eco Glades and Setia Ecohill in the Klang Valley.
“The outstanding sales achieved by all these new projects will however contribute strongly to earnings in the years ahead,” said SP Setia in a statement.
Other factors contributing to relatively lacklustre net profits growth are higher interest rates incurred in funding the company’s portfolio expansion overseas as well as the shift to high-rise developments now comprising a bigger percentage of profit contributions, said the company.
‘Demand expected to dampen in 1H14’
The developer also said it is well-prepared to ride out expected headwinds both globally and domestically, including an expected dampening of demand in the first half of next year.
According to SP Setia’s statement today, the developer’s total unbilled sales to be carried forward to FY14 stands at RM9.643 billion, which is expected to contribute strongly to the group’s earnings over the next few financial years.
Citing the slew of market pressures including labour shortages, the recent petrol subsidy cut and electricity tariff hike as well as various policy changes by the federal and various state governments, SP Setia said “it is undeniable that all market participants will require time to adjust to new realities” despite the fundamental demand for properties in the country remaining positive.
“The group’s record level of locked-in sales secured up to Oct 31, 2013 will therefore give management some space to better plan upcoming launches to suit the needs of the market when conditions stabilise and greater clarity is obtained on both demand and costs,” said SP Setia.
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