Resilient results for Sunway Berhad despite economic slowdown

Resilient results for Sunway Berhad despite economic slowdown

Bandar Sunway, 29 August – Sunway Berhad, one of Malaysia’s leading  property-construction conglomerates, today posted an increased revenue of 11% at RM1,155.7 million for the current quarter ended 30 June 2016, compared to the revenue of RM1,041.5 million in the corresponding quarter of the previous financial year.

However, net profit was lower at RM154.4 million compared to a net profit of RM237.9 million in the same quarter of last year mainly due to share of lower fair value gains from the annual  revaluation exercise done on Sunway REIT properties. Save for the fair value gains which  were lower by approximately RM87.1 million, the Group’s overall operational performance  was comparable to the corresponding quarter of the previous financial year, despite a reduction  in contribution from the construction division to 54.4% following the listing of Sunway Construction  Group Berhad in July 2015.

“We expect to achieve a satisfactory performance for the second half of the financial year, underpinned by the resilient and diversified businesses of the Group, although the market  outlook remains uncertain. This is further supported by Sunway’s strong balance sheet and low gearing,” said Chong Chang Choong, CFO of Sunway Berhad. The Board is pleased to declare an interim dividend of 5 sen per share which is similar to the interim dividend declared last year.

 

STRONG PROGRESS BILLINGS, HIGHER RENTAL CONTRIBUTION AND  BETTER OCCUPANCY DRIVE STEADY PROPERTY REVENUE

The property development segment reported revenue of RM315.1 million and profit before tax of RM60.6 million in the current quarter largely in line with the revenue of  RM324.2 million and profit before tax of RM53.1 million reported in the corresponding  quarter of the previous financial year. Although the revenue was lower, the performance of the property development segment in the current quarter was higher mainly due to  higher profit recognition from local projects including Sunway Velocity and  Sunway Geo Residences.

Property sales year to date, is at RM613 million as compared to last year at  RM478 million. Unbilled sales for the property development division remain healthy at RM2.0 billion, providing good profit visibility for the property division.

The property investment segment reported revenue of RM160.1 million and profit before   tax of RM41.3 million in the current quarter compared to revenue of RM144.8 million and   profit before tax of RM132.9 million in the corresponding quarter of the previous financial year. The increase in revenue was mainly contributed by higher rental contribution and better occupancy recorded from the portfolio of investment properties.

 
Sunway Pyramid  Hotel West and Nickelodeon Lost Lagoon were also opened in 2016, and has begun contributing to the Group’s revenue. However, profit before tax was lower in the current  quarter, mainly due to share of lower fair value gains from revaluation of Sunway REIT  properties, which was RM23.7 million in the current quarter compared to RM110.8 million  in the corresponding quarter of the previous financial year, and lower profit contribution  from the leisure and hospitality divisions due to the fasting month which fell in the 
current quarter.

HIGHER REVENUE FROM CONSTRUCTION SEGMENT

The construction segment recorded revenue of RM249.3 million and profit before  tax of RM34.5 million in the current quarter compared to revenue of RM244.1 million  and profit before tax of RM56.3 million in the corresponding quarter of the previous  financial year. Although revenue was marginally higher in the current quarter, profit  before tax was lower mainly due to the completion of several substantial infrastructure  projects in the corresponding quarter such as the BRT-Sunway Line and the completion  of LRT Package B (Kelana Jaya Line Extension) and Klang Valley MRT Package V4,  Section 17 to Semantan Portal in the fourth quarter of 2015. The Klang Valley MRT  Package V201, which will commence work in the second half of the financial year, also  contributed to the lower earnings due to the upfront planning and preliminary costs  incurred.

Nevertheless, the construction outstanding order book remains healthy at RM4.9 billion with a year-to-date order book replenishment of RM2.4 billion, close to the management’s  FY16 target of RM2.5 billion. This was boosted by a recent award of RM268 million by  The Society for International School of Kuala Lumpur (ISKL) to build an international  school in Ampang. In addition, the construction segment is well positioned to compete  for more infrastructure projects expected to be rolled-out by the Government.

 
 

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