Sime Darby Property's (SDPR) 3QFY24 net profit came in stronger than expected at RM128.3m (-11.5% YoY, -20.8% QoQ) mainly due to higher than expected margins achieved during the quarter. YTD, Group 9MFY24 net profit of RM413.8m constituted about 84% of our 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 & Asset Management (IAM) and Leisure segments. Pre-sales clinched for the period rose to RM3.2bn (c.+25% YoY) or already at 91% of the FY24 sales target of RM3.5bn, which we understand is also its highest nine-month sales performance in the Group's history. Unbilled sales remained flattish QoQ at RM3.7bn. All told, we adjust our FY24-27 upwards by about 8% on higher margins imputed. Elsewhere, we understand that its data center could potentially add RM100m to its earnings based on its triple-net rental arrangement upon completion in FY26. That said, we believe that positives are already baked-in with the stock currently at 0.9x of its book value, or at 21x FY25 EPS. Maintain Neutral with unchanged target price of RM1.20, or pricing it at 0.8x book value, or at about 18x FY25 EPS.

• 9MFY24 property revenue rose 36% YoY to RM3.1bn while the segment's pre-tax profit (PBT) increased by 64% YoY to RM695.4m, primarily driven by strong sales and financial progress across major townships such as Bandar Bukit Raja, Serenia City, Kuala Lumpur Golf & Country Club Resort, Nilai Impian, and Elmina Business Park. Additionally, non-core land monetisation activities further strengthened the division's performance YTD. Separately, the IAM segment posted a 22% YoY increase in revenue, reaching RM95.8m. We understand that its retail sub-segment registered positive growth, with KL East Mall notably achieving an increase in occupancy rates to 98.1% in 9MFY24, up from 89.2% in 9MFY23. Meanwhile, the newly opened Elmina Lakeside Mall also began contributing to revenue.
• Likely to surpass FY24 sales target of RM3.5bn. The Group launched products totaling RM2.9bn YTD in gross development value (GDV), achieving 75% of the full-year target launches worth RM3.9bn. Industrial products accounted for 47% of the launches, followed by residential high-rise at 27% and residential landed at 19%. We understand that average take-up rate is still encouraging at about 76% as of 31 October 2024. 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% YoY to RM3.2bn, or at about 91% of its FY24 sales target.

Source: PublicInvest Research - 21 Nov 2024