Sunway Berhad Posts Steady Results Despite Economic Slowdown

  • Revenue increases to RM1,069.0 million from RM1,060.0 million
  • Property development profit before tax increases 21.4% to RM69.1 million
  • Property investment revenue increases 21.5% due to higher rental contributions, occupancies and upgrades
  • High unbilled sales of RM2.0 billion and strong construction outstanding order book of RM5.0 billion to drive further growth
  • Strong balance sheet and low gearing of 0.37 times

Sunway Berhad, one of Malaysia’s leading property-construction conglomerates, today posted a net profit of RM102.1 million for the first quarter ended 31 March 2016, on the back of revenue of RM1,069.0 million compared to the revenue of RM1,060.0 million in the corresponding quarter of the previous financial year with a net profit of RM146.5 million. The difference in net profit is largely attributable to RM22.9 million capital gains from the disposal of two units of investment properties, Sunway Hotel Georgetown and Wisma Sunway, in the previous corresponding quarter and the reduction in contribution from the construction division to 54.4% following the listing of Sunway Construction Group Berhad.

The steady revenue despite the moderating economic environment was driven by Sunway’s core businesses of property development, property investment and construction which contributed 67% of the revenue.

Promising launches and certainty packages for home buyers and investors
The property development segment reported revenue of RM234.1 million and profit before tax of RM69.1 million in the current quarter, compared to revenue of RM180.7 million and profit before tax of RM56.9 million in the corresponding quarter of the previous financial year. The increase was mainly due to strong sales from Sunway’s wholly-owned Avant Parc project in Singapore.

“While we are cautious of the economic situation both globally and locally, we are well-positioned to face the challenges ahead. We remain resilient with diverse businesses across various geographies a strong brand, and unique build-own-operate business model. This is further supported by Sunway’s strong balance sheet and low gearing.”, said Sunway Group founder and chairman Tan Sri Dr. Jeffrey Cheah.

Its property development division, Sunway Property, targets to roll out RM1.6 billion worth of properties this year, supported by the Sunway Property Certainty Campaign which features a Guaranteed Loan, Deferred Payment and Voluntary Exit Plan. The division will be launching its exclusive Sunway Mont Residences in Mont Kiara this weekend.

“The launches for 2016 are spread across multiple strategic locations with good connectivity. The property development segment’s unbilled sales of RM2.0 billion as of 31 March 2016 combined with the property investment’s recurring income will provide good profit visibility for the property division”, he added.

Occupancy and rental contribution generate higher revenue
The property investment segment reported revenue of RM169.2 million and profit before tax of RM33.5 million in the current quarter, compared to revenue of RM139.3 million and profit before tax of RM43.0 million in the corresponding quarter of the previous financial year. The higher revenue for the current quarter was due to higher rental contribution and better occupancy recorded from the portfolio of investment properties. In addition, the leisure division recorded higher revenue due to the increase in visitors following the opening of the Nickelodeon Lost Lagoon in the current quarter at Sunway Lagoon. The refurbishment of the 650 rooms at Sunway Putra Hotel was completed at the end of 2015, and has begun contributing to the Group’s revenue from this quarter.

Strong track record attributes to steady growth
The construction segment recorded revenue of RM311.4 million and profit before tax of RM37.7 million in the current quarter, compared to revenue of RM375.3 million and profit before tax of RM52.2 million in the corresponding quarter of the previous financial year. The difference is attributed to lower billings from the civil and building projects, as some of them had reached or were near their completion stage including the BRT-Sunway Line project, Sunway Putra Place and Phase 3 of Sunway Pyramid (SP3) amongst others.

“Our construction outstanding order book of close to RM5.0 billion will provide a firm foundation to deliver a satisfactory performance going forward. We are ready to seize opportunities arising from the 11th Malaysia Plan and support the Government’s commitment to roll-out high impact construction works through our construction, quarry and building materials businesses”, commented Tan Sri Dr. Jeffrey Cheah.

“Moving forward, we will continue to focus on improving Sunway Group’s synergies to become more resilient and competitive. We are confident to deliver satisfactory performance in the next quarter in line with the business environment”, added Tan Sri Cheah.