Sales momentum to slow in 2023 but remain strong

PETALING JAYA: Sime Darby Property Bhd expects sales momentum to progress towards year-end but will likely slow down in 2023 due to headwinds in the year ahead, according to its group managing director, Datuk Azmir Merican.

“Sales momentum will still be strong (although) it may not be as high as in 2022. We don’t expect sales to be as good as in 2022. We also capitalised (on the momentum) and moved some launches forward, given that the demand was good.

“Going into the new year, we have a sales target. I can’t share the number for 2023, (but) I can share with you that it will be lower than what we achieved in 2022,” he told reporters during Sime Darby Property’s virtual media briefing (Q3’22) today.

The group achieved RM2.7 billion in sales for the nine months ended Sept 30, 2022, surpassing its initial sales target of RM2.6 billion for its financial year 2022 (FY22), which registered a 43% increase year-on-year from RM1.9 billion sales in the same period in FY21.

On challenges in 2023, Azmir said the three main factors are labour shortage, high construction material prices and increasing global interest rate.

“Based on current progress (on labour shortage), it will be resolved soon. Our contractors are getting workers, but it will take time for the whole value chain to settle down and ramp up again. So we must allow for some time.

“We have see prices somewhat stabilise, we also need to bear in mind the interest rate environment, not just in Malaysia but worldwide. (If) interest rate goes up, we buy goods that are also imported,” said Azmir.

He added that since the GE15 is over, Malaysia can get down to work and focus on “the right things”, which will help create a “positive” environment for the economy. This, he said, is important in terms of investor sentiment.

“If we get those things right, we will do better and manage the headwinds in 2023,” Azmir said.

The property developer returned to the black with a net profit of RM56.13 million in the third quarter ended Sept 30, 2022 (Q3’22) from a RM5.19 million net loss in the corresponding quarter last year. Its revenue rose 77.94% to RM689.3 million compared with RM387.38 million in the same quarter last year.

For its nine-month period, net profit surged 152.82% to RM212.69 million compared with RM84.13 million in the corresponding period in 2021. Revenue increased 20.78% to RM1.79 billion from RM1.48 billion.

As at Nov 6, 2022, its remaining bookings amounted to RM2.1 billion, while total completed inventories reduced to RM273.4 million as at Sept 30, 2022. Meanwhile, unbilled sales for future earnings visibility increased by 5.4% quarter-on-quarter to RM3.5 billion as at Sept, 30 2022 which marked a 70% year-on-year increase from the corresponding period last year