S P Setia’s Q2 2025: Soaring Sales Meet Revenue Realities
Published: August 21, 2025
Leading Malaysian property developer, S P Setia Berhad, has just released its financial results for the second quarter of 2025, and the report tells a fascinating story. On one hand, the company has demonstrated remarkable sales momentum, a clear sign of strong market demand. On the other, the headline revenue and profit figures show a year-on-year decline. So, what’s really going on?
This deep dive will unpack the key figures, explore the reasons behind the contrasting numbers, and analyse the company’s prospects in a changing market. One of the most impressive highlights is the company’s successful effort in strengthening its financial health, marked by a significant reduction in borrowings. Let’s get into the details.
Core Data Highlights
A Tale of Two Metrics: Sales vs. Revenue
The most striking feature of this quarter’s report is the divergence between sales achieved and revenue recognised. It’s crucial for investors to understand this distinction. “Sales” refer to new properties booked by customers during the quarter, reflecting current market demand and the company’s sales performance. “Revenue,” however, is an accounting figure recognised when projects are completed and handed over to buyers, which can be quarters or even years after the initial sale.
S P Setia reported a stellar sales performance, with new sales surging by an impressive 34% to RM1.186 billion in Q2 2025, up from RM883 million in the same quarter last year.
This growth was largely driven by its domestic projects, which contributed RM1.42 billion, or 75% of total sales in the first half of the year. The Central region was the star performer, accounting for RM955 million in sales.
A Closer Look at the Financials (Q2 2025 vs Q2 2024)
While new sales were booming, the recognised financial figures tell a different story due to a high base in the corresponding quarter of 2024. Last year’s results were significantly boosted by major land sales and substantial handovers of completed international projects in Australia and Vietnam. Without similar large-scale contributions this quarter, the year-on-year comparison appears lower.
Q2 FY2025 Results
- Revenue: RM944 million
- Profit Before Tax (PBT): RM196 million
- Net Profit (to owners): RM99.8 million
- Earnings Per Share (EPS): 1.99 sen
Q2 FY2024 Results
- Revenue: RM1,495 million
- Profit Before Tax (PBT): RM467 million
- Net Profit (to owners): RM295.0 million
- Earnings Per Share (EPS): 6.30 sen
The decline in revenue and profit is directly linked to the timing of project completions and the absence of one-off land sales that characterized Q2 2024. However, on a quarter-on-quarter basis, PBT increased from RM141 million in Q1 2025, indicating positive underlying momentum.
Strengthening the Foundation: Balance Sheet Health
Amidst the revenue fluctuations, S P Setia has made commendable progress in fortifying its financial position. The company’s disciplined approach to capital management is evident in its reduced debt levels.
The Group successfully lowered its net-gearing ratio to a healthy 0.34x, reflecting its strong commitment to its debt reduction strategy.
This deleveraging effort not only reduces financial risk but also lowers financing costs, positioning the company for more sustainable growth in the long term.
Risk and Prospect Analysis
Navigating Market Headwinds and Tailwinds
S P Setia is operating in a dynamic economic environment, presenting both opportunities and challenges.
A significant tailwind is the recent decision by Bank Negara Malaysia (BNM) to cut the Overnight Policy Rate (OPR) by 25 basis points to 2.75%. This move is expected to stimulate the property market by making mortgages more affordable for buyers and reducing financing costs for developers. As CEO Datuk Choong Kai Wai noted, the company remains “cautiously optimistic” while seeking expansion opportunities.
Looking ahead, the company’s future earnings are supported by a solid foundation:
| Metric | Value |
|---|---|
| Unbilled Sales | RM3.9 billion |
| Ongoing Projects | 42 |
| Remaining Land Bank | 5,191 acres |
| Effective Remaining GDV | RM90.18 billion |
This substantial pipeline provides clear visibility on future revenue streams. Furthermore, the company is strategically focusing on catalytic township developments and eco-industrial parks, while also expanding its international presence with the new Setia Garden Residences project in Vietnam.
However, the Group is not immune to market risks. The press release acknowledges “heightened, prolonged global uncertainty as well as rising construction costs” as key challenges that could impact margins and project timelines.
Summary and Investment Recommendations
S P Setia’s Q2 2025 report presents a nuanced but strategically sound picture. The headline decline in year-on-year revenue and profit is largely due to a high base effect and should be viewed in context. The real story lies in the robust 34% growth in new sales, which signals strong underlying demand for its products. Coupled with a strengthened balance sheet and a healthier gearing ratio, the company is building a resilient foundation for the future. The favorable OPR environment and a massive project pipeline provide a clear path for growth.
Key factors for investors to monitor going forward include:
- Revenue Volatility: The Group’s financial performance can be influenced by the timing of large project handovers and one-off land sales, leading to lumpy quarterly results.
- Market Sentiment: The property sector’s health is closely tied to broader economic conditions, interest rate policies, and consumer confidence.
- Cost Management: The ability to effectively manage rising construction and material costs will be crucial for protecting future project margins.
Final Thoughts
From a professional standpoint, this report highlights a classic challenge in property development analysis: distinguishing between short-term revenue recognition cycles and long-term sales momentum. S P Setia’s ability to drive sales growth while deleveraging its balance sheet is a commendable sign of operational strength and prudent financial management.
What are your thoughts on the Malaysian property market outlook following the recent OPR cut? Do you think S P Setia can convert its strong sales into record profits in the coming year?
Share your views in the comments below!
