KUALA LUMPUR: Sime Darby Property Bhd is on track to hit its RM2.4 billion sales target this year, according to RHB Research.
This was despite weak SD Property’s earnings in the third quarter of its financial year 2021 due to the lockdown, the firm said.
Overall, the firm is upbeat with SD Property management’s efforts to implement an in-house built seamless online sales process as the long-term strategy to strengthen recurring income stream.
“That (online process) is important to close sales during and even after the pandemic,” RHB Research said in a report today.
RHB Research said the RM2.4 billion target was achievable t given the RM1.0 billion worth of bookings in hand thus far.
“During our recent virtual meeting, the management indicated that the company is on target for its property sales in July and August.
“Response for Jendela Residences remains strong, with a take-up rate of more than 80 per cent for Phase 1. The show unit for Phase 2 was just opened last weekend, and in view of the strong buyers’ interest, SD Property should be able to rake in encouraging sales from this new phase.”
RHB Research pointed that vaccination rate for all workers had reached more than 90 and construction activities for all projects should reach almost 100 per cent in the coming weeks.
Given the rising raw material costs, construction contracts for new project such as Jendela will likely build in some buffer to take into account the upside risk in construction costs.
The firm said Phase 2 of the Battersea project in the UK had started its handover since May and the process would
continue until the handover of Phase 3A is to be concluded by mid-2022.
“While the management received some withdrawals, demand has gradually returned with Phase 2 and 3A, reaching a combined take-up rate of 80 per cent (by units) from 69 per cent as at December 2020. The handover of both phases is
expected to yield minimal profits given that the consortium has incurred a large impairment on the project in the previous year, and we understand that prices have not improved materially,” RHB Research added.
The firm kept its “Buy” call on SD Property with 75 sen target price, which is 13.6 per cent above its current share price of 66 sen.
Source: New Straits Times
