KUALA LUMPUR: Sime Darby Property Bhd (SDProp) expects between 30 per cent and 40 per cent reduction in property sales to RM1.4 billion to RM1.6 billion this year, against its initial target of RM2.3 billion.
Its group managing director Datuk Azmir Merican Azmi Merican said this was due to the impact of the Covid-19 pandemic, which halted its construction work and led to closure of sales gallery during the Movement Control Order (MCO).
"However, we foresee the number will continue to grow and convert bookings to sales. The focus is to ensure our sales team secure sales from bookings," Azmir said at a media briefing on SDProp's second quarter (Q2) results here yesterday.
He said SDProp had recorded healthy bookings of RM1.1 billion as at July 31 this year and expected to launch new projects with a gross development value of RM1 billion for the remaining quarters of the year.
SDProp's current unbilled sales stand at RM1.5 billion that will provide earnings visibility for the next two years.
It said 90 per cent of the unbilled sales would be recognised by financial year ending December 31, 2021.
"Most of our launches in landed residential (75.4 per cent), statutory (12 per cent), industrial (9.7 per cent) and commercial (2.9 per cent).
"With a total 1,751 units to be launched, we will remain focused on launching landed residential products within the right price range in our flagship township development in areas like Elmina West, Bandar Bukit Raja, Serenia City, Bandar Ainsdale, Putra Heights and Elmina East," he said.
For the first half of 2020, SDProp launched 708 units of properties with a GDV of RM587.3 million, garnering about 84 per cent average take up rate.
"The residential market is likely to see a slow uptick, supported by government's fiscal and monetary policies.
"We expect a gradual V-shaped recovery towards the remaining quarters of the year, which will help us with our properties launches," he said.
Although the first-half of 2020 was difficult and challenging, he said the company had seen promising signs of economic recovery.
"In navigating the uncertainties and aligning to current market sentiment, we have reviewed our product pipeline and will continue to ensure the right products at the right price points are offered to customers," he said.
SDProp will continue focusing on mid-range and affordable residential developments as the category was still dominating the market.
Azmir said the company would embark on a revenue generation initiatives by intensifying its marketing efforts with the use of digital channels, clearing unsold inventories, offering the right products within the right price range and converting of bookings into sales.
"We will also optimise our direct and overhead costs and spending, while preserving financial discipline to maintain resiliency and continue to review and monitor the financial impact of Covid-19."
SDProp had about RM823.2 million cash reserve as at June 30 this year, while its net gearing stood at 0.27 times with a debt level of RM3.4 billion.
SDProp swung to a net loss of RM81.77 million in the Q2 ended June 30, 2020, from a net profit of RM205.26 million posted a year ago.
In an exchange filing on Wednesday, the property developer said this was due to the closure of sales galleries and suspension of development activities during the enforcement of the MCO.
Its Q2 revenue plunged 66.7 per cent to RM288.23 million from RM865.90 million, owing to review of development projects and launches, a write-down of completed inventories, write-off of development expenditure and impairment of other assets totalling RM98.2 million.
For the first half, SDProp's recorded a net loss of RM67.61 million from a net profit of RM470.33 million, while revenue dropped 47.2 per cent to RM764.96 million from RM1.44 billion.