SD Property presses ahead with RM4.0bil sales target after solid FY2026 start

KUALA LUMPUR: Sime Darby Property Bhd is sticking with its RM4 billion sales target for 2026 after delivering a strong start to the year supported by resilient demand and healthy unbilled sales.

However, the property developer continues to face mounting cost pressures from higher diesel prices, rising material costs and ongoing global supply chain disruptions, which are increasing construction and operational expenses across its projects.

Group managing director and chief executive officer Datuk Seri Azmir Merican said the target remains achievable as the company continues to rationalise product designs and pricing strategies to preserve margins while keeping properties affordable for buyers.

“We are going into our mid-year review cycle where we will be sitting down with the senior team and getting feedback.

“So, typically, if we are going to revise, we will be revising when we do our second-quarter numbers. But as of today, we still hope to pursue the RM4 billion target,” he said at a media briefing.

The company said first-quarter sales performance was in line with projections, with sales already reaching 23 per cent of the full-year target.

Unbilled sales stood at RM4.1 billion, providing earnings visibility over the next year.

Azmir acknowledged that contractors are increasingly seeking compensation for higher operating costs amid volatile fuel prices and rising construction expenses.

Diesel prices, he noted, had surged significantly over the past year, affecting transportation, earthworks and construction equipment operations.

Contractors have approached the company to renegotiate certain fixed-fee contracts due to escalating costs.

“Our contracts are fixed fee, but being practical, we know that we have to also be responsible as developers. So, it’s something that we will be going through with our contractors,” he added.

The company is also monitoring supply chain stability closely to ensure sufficient building materials are available to complete projects on time.

On concerns over a potential oversupply in industrial parks and data centres, Azmir said the group remains cautious but believes its diversified product pipeline would help mitigate risks.

While industrial developments and data centres remain key earnings drivers, SD Property expects contributions from landed residential and high-rise developments to increase this year, resulting in a more balanced portfolio mix.

It currently has three data centre buildings under development and recently completed its first hyperscale data centre in Elmina, which carries a lease value of RM2 billion.

Azmir said buyer sentiment remains cautious amid global economic uncertainty and rising living costs, although stable interest rates continue to support genuine homebuyers.

He said the company is focusing on delivering the “right product at the right price” while optimising designs and material usage to manage costs more effectively.

For the first quarter, SD Property posted a 34 per cent increase in net profit to RM158.8 million, supported by stronger sales, higher recurring income and growth in assets under management.

Its revenue, however, slipped 8.3 per cent to RM799.18 million from RM871.6 million due to lower contributions from property development and leisure segments.

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المصدر: New Straits Times