sales target


Limited share price upside seen for property sector

PETALING JAYA: Rising interest rates, Malaysia’s slowing gross domestic product growth and unfavourable government policies will limit share price upside for Malaysian property development companies, said CGS-CIMB.

Although it expects the property companies in its coverage universe to post positive earnings growth this year, CGS-CIMB said share price upside will be limited and the sector is unlikely to re-rate to peak levels last seen in 2014.

“The property sector has garnered more interest lately due to its attractive valuations, but we believe the sector is cheap for a reason and this could be a false dawn. We believe developers could miss their new property sales targets for 2018, and are likely to set lower new sales targets for 2019. We think it’s a signal that the 2019 property market is likely to see lower new property sales and weaker buying sentiment,” it said in its report today.

According to its analysis, the medium 40% and bottom 40% (B40) households face difficulty in buying properties as the average house price is above both groups’ affordability range and despite government incentives and policies to address this issue, the oversupply in the property market has continued to rise since 2012.

“Likewise, property stocks have fallen from their peak valuations in 2014, some to the trough levels in 2008, making them attractively priced at the moment, in our opinion,” it added.

CGS-CIMB does not see much room for housing loan growth given the existing low interest rate environment, limited buyer’s affordability and possible interest rate hike.

In addition, restrictive government policies are still in place and it does not see any incentive for consumers to purchase property given the weak rental market and subdued property market.

Given the limited domestic affordability, higher real property gains tax and restrictive policies on foreigners, the property oversupply issue is expected to persist. Note that in 1H2018, properties priced below RM1 million accounted for 93% of total unsold residential property inventory.

“We expect the housing market to remain challenging in the near term, unless there is a meaningful surge in household income, decline in house prices or more positive measures are introduced,” it said.

Although lower property prices are possible, developers would be at the losing end if they were to lower prices at the expense of profit margins to spur new property sales demand or remove rebates/freebies to protect margins, which could result in weaker new sales.

“Even if new house prices are cut by 20%, we think the prices would still be unaffordable for the B40 households. Instead of focusing on increasing affordable housing supply and ownership, we believe a better way to approach the housing glut is to increase Malaysians’ household income in a meaningful way,” it said.

CGS-CIMB maintained its “neutral” call on the sector with an estimated dividend yield of 3% on average in 2019.

Sime Darby Property Bhd remains its top pick as the company has shown continuous improvement in its property development division and new property sales since its demerger in November 2017.

“We believe the group’s healthy balance sheet and massive land bank are advantages in addressing the change in future product demand,” it said.

Perodua Aruz could rake in sales of 2,100 units a month: AmInvestment

PETALING JAYA: AmInvestment Bank opines that Perodua could achieve average sales of 2,100 units a month for the brand new Aruz model, but it may cannibalise sales of the Alza to a minor extent.

“We believe the sales target for the Aruz is ambitious but not impossible. Sales of 2,500 a month would reap about 42% of the current average of 5,900 a month in total SUV sales, and is above the average of 1,900 a month seen by the current market leader in the segment, Honda.

“The Aruz is supported by the timing of its entry and market position as the cheapest option in a far less saturated segment of the SUV market,“ the research house said in a note last Friday.

The Aruz is now open for booking with prices between RM72,200 and RM77,200.

The Alza is a seven-seater MPV with a captive market of about 2,000 units a month, although it is offered at a lower price range of RM52,000 to RM63,000.

AmInvestment Bank said the announcement of the Aruz last week is an opportunistic move by Perodua and matches the expectation of an end-January/early-February launch. Perodua will be able to capitalise on the Chinese New Year period and potentially divert some attention from other SUVs including the Proton X70. However, it noted that the 1.8L X70 occupies a different segment and is priced higher (RM99,800–RM123,800).

“The Aruz continues Perodua’s emphasis on affordability and value. It will be the cheapest option in its segment and is bolstered by an energy-efficient vehicle rating based on a fuel consumption of 15.6km a litre. We note that the Aruz is Perodua’s best attempt at streamlining a model.

“It is only available on two variants (versus four to six variants on Perodua’s existing models), on a single engine size and transmission type (auto). We believe this will serve to pivot sales towards the higher variant, which costs RM5,000 or 7% more,“ it added.

AmInvestment Bank retained its projection of 3% volume growth to 233,000 units for Perodua in 2019, with the Aruz accounting for about 11% of total sales.

“Volume would still be anchored to the Myvi and Axia, while the Aruz will serve to boost margins. Perodua looks to close a bumper year in 2018 during which it rode on the new Myvi and took efforts to fully capitalise on the tax holiday.”

It reiterated that the key beneficiaries to Perodua will be MBM Resources Bhd and Pecca Group Bhd.

LBS Bina Group sets RM1.5b sales target for 2019

PETALING JAYA, Jan 4 — Leading township developer LBS Bina Group Berhad (LBS) has set a sales target of RM1.5 billion for 2019. LBS will also be launching new projects worth RM1.82 billion mainly catering to affordable homes for Malaysians, which…

LBS Bina sets RM1.5b sales target for 2019

KUALA LUMPUR: Property developer LBS Bina Group Bhd has set a sales target of RM1.5 billion for 2019 as the company will launch new projects worth RM1.82 billion this year.

Managing director Tan Sri Lim Hock San (pic) told a media briefing today that the group is confident of sustaining its RM1.5 billion sales target this year driven by the right product offerings and new launches mainly in the Klang Valley.

These include the LBS Alam Perdana township in Puncak Alam, Kita @ Cybersouth township in Dengkil and Residensi Bintang Bukit Jalil condominium which are expected to contribute about RM1.2 billion to its overall sales target this year.

As at Dec 31, 2018, the group’s total unbilled sales stood at RM1.75 billion.

UEM Sunrise net profit down 85% in Q3 on lower revenue

PETALING JAYA: UEM Sunrise Bhd’s net profit for the third quarter ended Sept 30, plunged 85.13% to RM21.17 million from RM142.9 million in the same quarter last year, due to lower revenue.

Revenue for the quarter under review declined by 50.83% to RM430.1 million from RM846.1 million registered in the same quarter in the preceding year.

“We are finally reaping the benefits of our maiden venture in Australia with the completion of Aurora Melbourne Central’s first separable portion valued at A$86.8 million (RM262.8 million). Totalling 21 floors starting from level 10, we have completed 127 residences and 10 office suites. On Sept 10, we delivered and received settlement for 120 residences and four office suites; a strong settlement rate of 92% against the total number of units completed, translating into an amount of RM195.6 million as seen in our latest results,” the group’s managing director Anwar Syahrin Abdul Ajib said in a statement.

“We hope to complete another 70 units valued at A$28.4 million before year-end. The remaining separable portions will be delivered in 2019.

Conservatory with total GDV of A$319 million, the first separable portion is expected to commence settlement in December while full settlement is anticipated to complete by 2019”, he added.

Anwar added that the group is on track towards hitting its sales target of RM1.2 billion considering as it has already achieved RM900.5 million in sales as at end of September.

“We are also pleased to point out that 30% came from inventories much of which is contributed by the company’s inventory monetisation efforts the latest being the 50 years of community building campaign, aptly called “C50”, which to date has generated sales plus bookings totalling RM262.3 million, while 23% were from new project launches – Kondominium Kiara Kasih and Serimbun. The remaining 47% was from our other ongoing projects” he said.

UEM Sunrise’s unbilled sales remain healthy at RM4.7 billion.

Asset divestment still remains as one of the group’s key strategies, after having recognised sales of three separate land parcels in Iskandar Puteri namely to Country View Bhd, RA Suria Sdn Bhd and Landasan Kejora Sdn Bhd.

Several parcels of non-strategic assets have also been earmarked for divestment amounting to RM349 million.

For the cumulative period of nine months, the group reported a 66.33% increase in net profit of RM260.25 million against RM156.5 million last year.

Revenue for the period under review, showed a decrease of 17.08% to RM1.3 billion from RM1.6 billion as most projects are at early stages of their development compared to the same period last year.

Sunway Q3 net profit up to RM145.3m

KUALA LUMPUR, Nov 21 ― Sunway Bhd’s net profit for the third quarter (Q3) ended Sept 30, 2018, rose marginally to RM145.31 million from RM145.01 million recorded in the same quarter last year. Revenue increased 12.6 per cent to RM1.44 billion…

SP Setia’s third quarter profit down 81%

PETALING JAYA: SP Setia Bhd’s net profit plunged 81.3% to RM65.19 million for the third quarter ended Sept 30, 2018 against RM348.89 million in the previous corresponding period, due to lower contribution from property development following the completion of Phase 1 of the Battersea Power Station project.

Its revenue also slipped 6.1% to RM993 million from RM1.06 billion.

SP Setia’s nine-month net profit shrank 20% from RM711.57 million to RM569.41 million, while revenue dropped 12.8% to RM2.57 billion from RM2.95 billion.

During the period, the group achieved sales of RM3.21 billion where the local projects contributed RM2.32 billion or 72% of the total sales.

The group said in a filing with the stock exchange that for the first nine months of 2018, it has launched projects with a combined gross development value of RM4.64 billion.

Another RM1.60 billion is planned for the remaining months of 2018, where the group will continue to focus on the launches of mid-range landed properties in the established townships of Klang Valley and Johor Baru.

Looking ahead, SP Setia said the property market remains subdued as many potential buyers find difficulty to obtain their desired loan financing margin due to the stringent lending guidelines or are taking a “wait-and-see” approach as the current economic uncertainties persist.

“While the expected pick-up in sales has not been evident during the month of October 2018 and conditions remain challenging, we are still committed to meet our sales target for the year.”

Its sales target for 2018 has been set at RM5 billion.

SP Setia also hopes that the initiatives of helping home buyers in Budget 2019 will uplift the market sentiment.

“In the long run, the group’s prospects remain positive with total unbilled sales of RM7.92 billion, anchored by 46 ongoing projects and effective remaining land bank of 9,548 acres with a GDV of RM155.26 billion as at Sept 30.”

The stock gained 1 sen or 0.5% to close at RM2.01 today on 981,100 shares done.

Matrix Concepts posts record RM898.6m sales

PETALING JAYA: Matrix Concepts Holdings Bhd’s net profit for the second quarter ended Sept 30, 2018 rose 2.2% to RM52.94 million from RM51.83 million a year ago due to an enlarged revenue base.

In a filing with Bursa Malaysia, the group said its margins during the quarter were moderated due to fewer higher-premium property launches in its product mix.

Revenue for the quarter rose 24.8% to RM253.31 million from RM202.9 million a year ago mainly due to revenue recognition from the M. Carnegie boutique apartment and higher revenue contribution from sales of industrial properties at Bandar Sri Sendayan.

“This helped offset the lower revenue contribution from Bandar Seri Impian, attributed to the delayed timing of launches,” it said.

In addition, the group’s investment properties namely Matrix Global Schools, d’Tempat Country Club and d’Sora Business Boutique Hotel also contributed higher revenue of RM9 million, compared with RM7.4 million a year ago.

The group attributed the stronger performance to higher student enrolments, increased spending by club members and increased occupancy rate at the hotel.

For the six months ended Sept 30, 2018, net profit rose 5.9% to RM103.09 million from RM97.38 million a year ago while revenue rose 28.6% to RM483.35 million from RM375.75 million a year ago.

The group said in a statement today that it achieved record high property sales of RM898.6 million during the period, representing a 39.4% growth year-on-year on the back of resilient demand for landed and “affordable-premium” properties despite prevailing market conditions.

The robust sales performance, which includes RM92.4 million from M. Carnegie in Australia, saw the group surpass its sales target for the six-months period by 50% and is close to 75% of its financial year ending March 31, 2019 (FY19) sales target.

“The group is optimistic of continuing its growth momentum in light of the strong take-up rate of 80.5% and anticipates for FY19 new property sales to surpass the RM1.2 billion mark achieved a year ago,” it said.

As at Sept 30, 2018, the group’s total undeveloped land bank stood at 1,405 acres while unbilled sales grew to a record-high of RM1.4 billion from RM1.1 billion a year ago.

The group declared a second interim single tier dividend of 3.25 sen per share for FY19, to be paid on Jan 9, 2019. Together with an earlier-paid first interim single-tier dividend of 3.25 sen per share, the total estimated payout stands at RM48.9 million.

“The latest results further reinforce the fundamental strengths of the group, and the strong earnings visibility acts as a solid platform for us to pursue the next phase of growth … we are confident of achieving better performance going forward, supported by rising sales and a healthy launch pipeline,” said its chairman Datuk Mohamad Haslah Mohamad Amin.

The group is on track to meet its target of RM1.7 billion worth of new property launches in FY19, with RM807.3 million worth of residential properties launched in the first half of the year.

F&N continues to invest in innovation, capacity

KUCHING: Fraser & Neave Holdings Bhd (F&N) aims to solidify its commitment to sustainable growth and profitability through continued emphasis on driving innovation and capability building. As Malaysia’s leading food and beverage manufacturer and distributor, F&N is ramping up its product offerings to quench growing consumer demand for healthier products and convenience, in tandem with […]

Phase in sugar tax please, says F&N

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N), which estimates that prices of its beverages could increase by 10 sen to 60 sen if the sugar tax is passed on to consumers, is appealing that the tax be phased-in, rather than take effect on April 1, 2019, as reformulation of existing products take time.

F&N CEO Lim Yew Hoe said about 90% of its beverage portfolio are products containing sugar exceeding 5 grams per 100ml, which will be subjected to excise duty of 40 sen per litre starting April 1, 2019. F&N’s products include F&N 100 Plus, F&N Fun Flavours, F&N Seasons, Oyoshi, F&N Condensed and Evaporated MIlk, F&N Magnolia, Farmhouse, Carnation and F&N Fruit Tree.

“It (sugar tax) is not going to be positive for sure (for the industry). April 1, 2019 is too early. It’d be better if we’re able to do this in a phased-in manner,” Lim said at a media and analyst briefing here yesterday.

He said the reformulation process that F&N has to go through for its products includes working with new suppliers, using new ingredients, as well as undergoing lab trials and commercial trials. This is followed by consumer surveys and tweaking, halal certification application, production and putting the products on the market.

“We prefer for this process to be phased in so that we can do it more systemically. It’s important that producers introduce a good reformulated product. Rushing is never good. Reformulation takes time and looking at our products, we need to reformulate quite a lot of things and five months (to April 1) is very quick,” explained Lim.

He said reducing the sugar content of its beverages from 6% to 5% is not difficult but it is a matter of how much cost increase, and how much should be passed on to consumers.

Lim added that sugar is not easy to replace with the same costs and taste, explaining that sugar provides the “texture and body” and is stable in keeping the quality of beverages.

“It’s difficult to replicate recipes by having less sugar. (100 Plus) Reduced Sugar actually costs a lot more to produce than the normal 100 Plus because the recipe to go to 4% sugar and yet be accepted by consumers is not easy,” he explained.

Lim said F&N is targeting to have an alternative healthier product for every product category by 2020.

He said the management is waiting for more details and clarification on the sugar sweetened beverages excise tax before they are able to fully assess the impact, but will closely monitor the situation.

Over the years, F&N has reduced the amount of sugar in its total beverage portfolio, decreasing the sugar index (sugar amount in gram per ml of beverage) by 34% since 2004.

With the evaporated milk line at its dairy manufacturing plant in Pulau Indah running at full capacity, the group is investing in a new RM15 million production line to further expand its capacity. This would lead to greater export capability for F&N, in line with its aim to surpass the group’s RM800 million export sales target by 2020.