Sime Darby’s property division targets over RM3 billion sales in FY16

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KUCHING: Sime Darby Property Bhd (Sime Darby) is targeting to achieve sales of over RM3 billion in FY16 from existing units and new launches, according to a local media report.

The report cited its managing director Datuk Jauhari Hamidi as saying that in 1HFY16, the division sold 1,000 units of existing units, and that he was confident of achieving the full-year target, especially following the launch of phase two of the Elmina Valley project last week.

As at March 16 2016, AmResearch Sdn Bhd (AmResearch) said that the unit had launched RM607 million worth of projects including the first phase of Elmina Valley’s 20’x60’ double-storey link homes.

The first phase of Elmina was 95 per cent sold on the day of launch, at an average price of RM600,000. The second phase will be priced at an average of RM650,000 per unit.

For 1HFY16, the property division booked a turnover of RM1.2 billion and an estimated earnings before interest and tax (EBIT) of RM180 billion and AmResearch expect property contribution at six per cent and 17 per cent of group revenue and EBIT, respectively, for FY16F.

Sime Darby is in the midst of disposing of three and 13 industrial properties in Singapore and Australia, respectively, to raise RM1.8 billion to pare down debts, and cut gross gearing to 54 per cent from 61 per cent currently.

Positively, CPO prices are trending at RM2,700 per tonne, which should ease immediate cashflow concerns for the group added the research house. However, FFB production growth will be slower than what it would likely be without the impact of El Nino and replanting activities.

“The plantation division expects FY16 fresh fruit bunch production at nine million tonnes for Malaysia and Indonesia and at 1.7 million tonnes for NBPOL.

“The total of 10.7 million tonnes is 5.7 per cent higher than our 10.1 million tonne estimate,” explained AmResearch.

Its Indonesia plantation performance, which accounts for 30 per cent of production, has been affected by the government’s US$50 per tonne export levy.

Additionally, conditions remain tough given the slowdown in the industrial and auto divisions, which continue to be affected by margin squeeze.