SP Setia 1Q net profit at RM31.17m

KUALA LUMPUR: SP Setia Bhd posted net profit of RM31.17 million in the first quarter ended Jan 31 (1QFY09), which was 35% lower than the RM48.52 million a year ago where there was an inclusion of RM26 million from land sale.

It said on March 19 that revenue fell 14.4% to RM259.92 million from RM303.65 million. Earnings per share was 3.07 sen compared with 4.81 sen.

“The group’s profit and revenue were mainly derived from its property development activities carried out in the Klang Valley, Johor Bahru and Penang,” it said.

Ongoing projects which contributed to the Group’s profit and revenue include Setia Alam and Setia Eco-Park at Shah Alam, SetiaHills at Bukit Indah Ampang, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru and Setia Pearl Island in Penang.

On the lower earnings in 1QFY09, it said this was mainly due to the inclusion of profit from the disposal of land in Ulu Kelang Aeon Co. (M) Bhd for RM26 million in 1QFY08.

SP Setia also said the lower profit before tax of RM44.5 million for 1QFY09 was RM58 million lower than the 4QFY08 ended Oct 31, 2008.
This is mainly due to the profit recognition of RM26.9 million on the disposal of the 25.07% interest held in Loh & Loh Corporation Berhad in the preceding quarter and lower profit contribution from property development due to the global financial crisis which negatively impacted sentiments beginning from September 2008 last year.

“Property development segmental margins are also lower at 15.7% this quarter compared to 17.9% in the preceding quarter,” it said.

SP Setia said this was mainly due to lower margins achieved by the initial phases of Setia Eco Gardens and several phases in other ongoing projects which were launched during 1Q and 2Q of FY2008.

“For these phases, building contracts had to be awarded at the height of the construction price increase in order to enable the 24 month delivery period to purchasers to be met,” it said.

Whilst cost pressures had to a large extent abated, the group’s profit margins in the months ahead would also be impacted by the structural shift in its product mix.

“This is because integrated commercial and high rise development projects such as the Setia Walk project typically carry lower margins as compared to landed residential properties. However, due to the much higher density of such projects, the overall yield per acre of land should nevertheless be better,” it said.

By The EDGE Malaysia (by Joe Chin)