SP Setia, latest result at 19.97 percent gross profit

I just wrote about Eco World yesterday.Read here: Eco World and its RM8.7 billion Bukit Bintang City Centre (BBCC)  Thus, I must also write one on SP Setia Bhd. Reported in a few medias, it has just released it’s latest results. Pre-tax profit for 12 month period ended Oct 31 2015 is up from RM722.44 million a year ago to current RM1.12 billion. (Yes, for some developers, even the total sales revenue is less than RM1 billion but SP Setia’s profits alone is more than RM1 billion). Total revenue for the same period jumped to RM5.61 billion from RM3.81 billion previously. This gave it a gross profit margin of 19.97 percent. Another pretty decent number since the whole of 2015 is a period many developers and agents would want to forget.
Via a statement, SP Setia Bhd said that the better performance for revenue and profit was because of profit recognition from the development of its strong sales pipeline. Local projects contributing 64 per cent to total sales. It also handed over Fulton Lane project in Australia. In terms of it’s target of RM4 billion sales by end December 2015, its acting President and Chief Executive Officer, Datuk Khor Chap Jen said they are confident to achieve it. Besides this, it has a strong unbilled sales of RM9.5 billion. This should be a good buffer against the current slowdown in many projects currently. As at Oct 31, 2015, SP Setia has 27 ongoing projects. Total undeveloped landbank remaining is 1,592.84 hectares and an estimated gross development value of RM69.07 billion.
To be direct, I do not think SP Setia is on the way down as many in the industry are saying since so many of its staffs are now in Eco World. I always think that as long as all the existing projects are managed well, it would be fine for many more years to come. As for the dynamism etc, if one truly believe Eco World is better, by all means buy their projects and buy their stocks. As of now, I do not own any shares in both companies and has yet to buy any property from both companies. Yes, I know many people in both the companies and they are definitely doing well in what they are doing currently. Happy evaluating and buying, whichever developments you believe is better.
written on 12 Dec 2015
Next suggested article: SP Setia wins Malaysian Developer of the year: SEAPA 2015


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