Sime Darby Property actively traded after quarterly results beat expectations

• Sime Darby Property reported a net profit of RM144.91 million for the third quarter ended Sept 30, 2023 (3QFY2023), more than doubled from RM56.13 million a year ago, driven by higher sales of residential and industrial products, and increased on-site progress development.

KUALA LUMPUR (Nov 27): Sime Darby Property Bhd was actively traded on Monday morning, after its latest quarterly results beat analysts’ expectations, with the management indicating that the group is on track to surpass RM2.7 billion in sales this year.

At 10.11am on Monday, the real estate developer was the eighth most actively traded counter across all Bursa securities, with 16.65 million shares traded, up 2.5 sen or 4.0% at 65.5 sen, giving it a market capitalisation of RM4.45 billion.

Sime Darby Property reported a net profit of RM144.91 million for the third quarter ended Sept 30, 2023 (3QFY2023), more than doubled from RM56.13 million a year ago, driven by higher sales of residential and industrial products, and increased on-site progress development.

The set of results beat most analysts’ expectations, with Maybank Investment Bank raising its earnings forecasts by 23% for FY2023, 18% for FY2024 and 19.7% for FY2025, after factoring in land sales in Kedah and Negeri Sembilan, and the change in progress billing assumptions.

“Contributions from high-rise should increase in 4QFY2023, with more new high-rise launches worth RM471 million in GDV (gross development value). Judging from the total bookings of RM2.2 billion as at Nov 5, 2023, Sime Darby Property will likely exceed our earlier FY2023 sales assumption,” said the investment bank, which kept its “buy” rating and target price (TP) of 75 sen.

TA Securities, meanwhile, also kept its “buy” rating, but raised its TP to 89 sen from 87 sen previously, after raising its earnings forecasts by 31%-38% for FY2023-FY2025.

“We raise our FY2023 new sales assumptions to RM3.3 billion, but maintain our FY2024 and FY2025 sales assumptions at RM3.2 billion and RM3.5 billion respectively. We also adjusted the development margins for certain ongoing projects,” said the brokerage firm.

“We are optimistic about Sime Darby Property's venture into rooftop solar energy solutions. This move aligns with Sime Darby Property's strategy to evolve into a real estate company, with diversified revenue sources by 2025.

“It also complements the government's aim to attain 70% renewable energy capacity by 2050. The collaboration with Tenaga Nasional Bhd  (TNB) marks the initial step, aiming to explore and develop sustainable energy initiatives,” it added.

Under the partnership, Sime Darby Property and TNB will explore integrating rooftop solar solutions into the developer’s townships and developments.

Hong Leong Investment Bank also maintained its “buy” rating, with a higher TP of 81 sen from 79 sen previously, after raising its earnings forecasts by 9.7% to 16.7% for FY2023 through FY2025, due to higher progress billings and launch assumptions.

“We continue to like Sime Darby Property, given its vast exposure to residential landed homes in the Klang Valley, which are becoming increasingly scarce, thus supporting house price appreciation,” said the investment bank in a note on Monday.

“In addition, given the current government’s focus on bringing in foreign direct investments, the stock with its exposure to the industrial segment provides a good proxy for this trend,” it added.

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