According to Kenanga’s research report, Sime Property’s recent 9-month earning announcement looked strong and the sales momentum could extend into early 2023. However, it alluded that next year’s sales would soften due to lower launches on labour constraints.
This prompted SDP to make a conscious decision to hold back launches while waiting for its contractors to beef up their labour workforce, leading to more optimum and lower contracting costs for the developer. In view of this Kenanga maintains its forecasts, TP of RM0.55 with a outperform call.
- A snapshot of the earnings briefing, the group attributed its strong 9MFY22 sales of RM2.7b to aggressive launches worth RM2.1b, and strong demand for its landed residential and industrial properties. While the company expects the strong sales momentum to extend into early FY23, it guided for lower sales for FY23 as it intends to hold back launches amidst the lingering labour shortage issue.
- Sime Property made an RM10.6m provision due to labour shortage in 3QFY22 and planned launches worth RM500m in 4QFY22 comprising its bread-and-butter landed residential worth c.RM150m, two high-rise developments in Melawati Heights and Putra Heights totalling RM350m. Its unbilled sales stood at a record high of RM3.5b as of end-September 2022.
- Meanwhile, Battersea’s 9MFY22 sales of GBP247m were satisfactory but the market condition remains challenging amidst a
high-interest rates environment and a weak economic backdrop. Loss forecasts for Battersea (40% JV stake) are consistent with the group’s downbeat guidance for the project’s near-term outlook. - As for the commercial and industrial collaboration with Logos, the construction for E-Metro Logistic Hub 1 (with 800k square feet of leasing space) in Bandar Bukit Raja (Klang) has commenced and is scheduled for completion in mid-2023. The company has received encouraging inquiries for the space and is hopeful to secure a tenant soon (either one single tenant or multiple tenants). In view of the strong demand for industrial logistic space, the JV has decided to commence construction for E-Metro Logistic Hub 2 which would add another 1.2m square feet of leasing space within the vicinity.
- Kenanga continues to like the company due to its wide product range enabling it to still cash in on landed residential and industrial products while the high-rise segment is weighed down by oversupply, mature township projects that provide recurring sales, and seemingly effective digital marketing through social media platforms, in addition to the conventional sales channels.
