• Maintain Buy (TP: RM1.73). Sime Darby Property Bhd (Simeprop)'s 9MFY24 revenue surged by 35% YoY to RM3.3bn. This growth was driven by strong sales across a diverse product mix, increased progress in the Property Development (PD) segment, and higher revenue from the Investment & Asset Management and Leisure segments. Property sales for the period rose to RM3.2bn (+25% YoY), achieving 91% of the RM3.5bn FY24 target and marking the company's highest 9M sales YTD. Core net profit surged by 53.4% YoY to RM424mn, which was 79% within our expectations. The improved performance was mainly driven by the PD segment and foreign exchange gains from the stronger Malaysian Ringgit (MYR), reported under other gains, helped mitigate the higher share of losses from joint ventures (JV). Maintain a BUY call with a TP of RM1.73, pegged at 1.1x P/B to FY25F BVPS of RM1.57.

• Key Highlights. On QoQ basis, Simeprop's revenue and core net profit fell by 9.3% and 20.2% respectively. This setback was primarily driven by losses from a JV, resulting from increased development costs for a completed project. Additionally, the leisure segment experienced higher depreciation charges following an asset review during the financial period. However, this was partially offset by foreign exchange gains due to the strengthening of the Malaysian Ringgit (MYR). On the flip side, the PD segment posted strong results, driven by robust sales in high-rise residential and industrial properties. Ongoing development projects in key townships, such as City of Elmina, Bandar Bukit Raja, Nilai Impian, Serenia City, KLGCC Resort, and Elmina Business Park, contributed to the overall positive performance.

• Earnings Revision. No revision.

• Outlook. We anticipate Simeprop to sustain its positive earnings in 4Q24, driven by the robust industrial segment and improvements in the residential market. The company is on track to achieve its FY2024 sales target of RM3.5bn, supported by RM3.7bn in unbilled sales and strong cash reserves.

Source: BIMB Securities Research - 21 Nov 2024