20250529 Sime Darby Property

Maintain BUY and TP of MYR2.33, 64% upside with c.3% FY26F yield. Sime Darby Property’s 1Q25 earnings are below estimates, as some industrial property sales are yet to be recognised. Its property sales were encouraging, at MYR928m for the quarter, ie on track to meet the MYR3.6bn target by the year-end. While the property sales momentum is likely to stay strong, given its strategic launches, management is also driving the growth of the investment property segment – KLGCC Mall will open its doors in 2H25, while SDPR will ensure the timely delivery of two data centre facilities. 

1Q25 results. SDPR’s property development revenue during the quarter eased, as some sales of industrial products have yet to meet the revenue recognition criteria while revenue from residential projects decelerated due to the lower number of launches held in 2H24. Overall cost structure improved, as marketing and selling expenses were only at MYR27.7m (39% lower YoY) as a more cost-effective promotional approach was adopted during the quarter. Finance costs toned down to MYR11.8m (from MYR17m in 4Q24) due to higher interest capitalisation, in line with the higher number of qualifying assets. Net gearing increased to 0.28x, from 0.24x in 4Q24.  

Strong sales momentum in 1Q25. The company’s 1Q25 property sales totalled MYR927.5m (4Q24: MYR900m). Sales were mainly contributed by industrial products (MYR461.5m, ie 50% of the total), followed by residential high-rise (MYR246.3m, ie 27% of the total), residential landed (MYR127.9m, ie 14% of the total) and commercial products (MYR65.3m, ie 7% of the total). These include industrial products from Elmina Business Park and Serenia Industrial Park, as well as residential products from The Reya, The Ophera and Kanopi Residences. About MYR656.5m worth of projects were launched during the quarter, and successful projects are residential landed homes – The Nine in Elmina West (GDV: MYR167m), which is fully sold, and semidetached offices badged under Quadria in Bandar Bukit Raja (GDV: MYR194.9m) which are 79% taken up.  

MYR3.3bn worth of new launches for 9M25. In view of the strong pipeline of launches and bookings worth MYR1.6bn, SDPR should be on track to meet its MYR3.6bn sales target by the year’s end.  

We maintain our FY25-26 earnings forecasts as we expect 2H25 earnings to strengthen further. SDPR’s unbilled sales are at MYR3.8bn (vs MYR3.7bn in 4Q24) which is the highest level it has recorded since 2017.  

Maintain TP. Our TP, which incorporates a 4% ESG premium due to its ESG score of 3.2 out of 4 is based on a 25% discount to RNAV. 











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