KUALA LUMPUR: Sime Darby Property Bhd is likely to surpass its full-year sales target of RM3.5 billion after recording its strongest nine-month performance to date for the period ended Sep 30, 2024 (9MFY24).
Public Investment Bank Bhd (PublicInvest Research) said the group launched products totaling RM2.9 billion year-to-date (YTD) in gross development value (GDV), achieving 75 per cent of the full-year target launches worth RM3.9 billion.
Industrial products accounted for 47 per cent of the launches, followed by residential high-rises at 27 per cent and residential landed at 19 per cent.
"We understand that the average take-up rate is still encouraging at about 76 per cent as of October 31. Key residential projects included Elmina Green 7, Hype Residences at SJ7—a transit-oriented development—and The Ophera at KLGCC Resort, alongside developments in other townships.
"Pre-sales achieved YTD grew 25 per cent year-on-year (YoY) to RM3.2 billion, or at about 91 per cent of its financial year 2024 (FY24) sales target," it said in a note.
Sime Darby Property's 9MFY24 net profit of RM413.8 million constituted about 84 per cent of PublicInvest Research's and consensus' full-year estimates, driven by strong sales momentum across a diverse product mix, increased site progress within the property development segment, and growing revenue contribution from the investment and asset management (IAM) and leisure segments.
Pre-sales clinched for the period rose to RM3.2 billion, or already at 91 per cent of the FY24 sales target of RM3.5 billion.
"Elsewhere, we understand that its data center could potentially add RM100 million to its earnings based on its triple-net rental arrangement upon completion in FY26."
The firm maintained its 'Neutral' call on the stock with an unchanged target price of RM1.20.
Meanwhile, Hong Leong Investment Bank Bhd (HLIB Research) raised its FY24, FY25, and FY26 forecasts for the group by 9.9 per cent, 4.6 per cent and 3.3 per cent respectively, as it imputes higher sales and billing assumptions.
Despite the outstanding performance by the group for 9MFY24, HLIB Research noted Sime Darby Property may be affected by the introduction of a tax relief on housing loan interest announced in the 2025 Budget.
The budget outlined that the tax relief is for home purchases priced up to RM750,000.
"This incentive applies to first-time homebuyers who make their purchase between Jan 1, 2025, and Dec 31, 2027.
"As a result, some potential buyers may delay their purchases until 2025 to benefit from the relief, potentially dampening Q4 2024 sales for developers like Sime Darby Property," it added.
HLIB Research maintained a 'Buy' call on the stock with an unchanged target price of RM2.05.
In a separate note, RHB Investment Bank Bhd (RHB Research) maintained its earnings forecast for the group.
It noted that while the strong property sales may provide upside risks to FY24 earnings, there is still unpredictability of the Battersea Power Station (BPS) project, given its past history of cost overruns, impairments, and provisions for yield guarantees.
It said that the project continued to incur losses, albeit at a smaller quantum quarter-on-quarter, but is offset by robust numbers recorded by its key business divisions.
RHB Research maintained a 'Buy' call on the stock with an unchanged target price of RM2.20.