Monday, August 25, 2025
FBMKLCI: 1,597.47
Sector: Property
THIS REPORT IS STRICTLY FOR INTERNAL CIRCULATION ONLY*
Sime Darby Property: Resilient Margins, Record Pipeline, and Recurring Income in Focus
Resilient Margins, Record Pipeline, Recurring Income in Focus
Core Insights
Sime Darby Property (SimeProp) posted resilient 2Q25 results with a 22% QoQ revenue increase, though YoY revenue was down 11% primarily due to lower land sales and industrial project timing. Despite this, profitability remained robust with a gross profit margin of 33.3%, exceeding guidance. Management anticipates a stronger 2H25 as progress billings accelerate.
Sales momentum remained healthy, achieving RM2.0bn in 1H25 (56% of the full-year target), significantly led by industrial products (40% of sales). Unbilled sales reached a record RM3.9bn, ensuring strong revenue visibility into FY26-27.
The company is actively expanding its recurring income platform under engine 2 of SHIFT25. Key developments include KLGCC Mall (85% occupied, soft launching October 2025), profitable Elmina Lakeside Mall, and positive rental reversions at KL East Mall. Industrial assets like Metrohub I are fully leased, Metrohub II is 88% occupied, and Metrohub III is under construction. Furthermore, SimeProp secured two hyperscale data centre leases at Elmina Business Park, valued at RM7.6bn over 20 years.
Strategic long-term growth is underpinned by initiatives such as the Carey Island joint venture, potential repositioning of Gurun land parcels, and steady progress at Battersea Power Station (BPS) in London, which, despite being near-term loss-making, enhances branding and optionality. The balance sheet remains healthy, with net gearing modestly rising to 31%.
TA Securities maintains a BUY rating on Sime Darby Property with an unchanged Target Price of RM2.05, based on a 1.2x CY26 P/B and a 5% ESG premium, reflecting strong performance and future growth drivers.
Margin Remains Robust Despite Lower Revenue YoY
Sime Darby Property (SimeProp) posted a resilient set of 2Q25 results, with revenue climbing 22% QoQ to RM1.06bn, bringing 1H25 revenue to RM1.93bn (-11% YoY). The YoY softness was mainly due to lower land sales (RM33.7mn vs RM96.1mn in 1H24) and timing of industrial revenue recognition, as several projects were still in early construction stages. Despite this, profitability held firm, with gross profit margin at 33.3%, well above the 20-25% guidance. Core net profit of RM258.1mn (-9% YoY) was broadly in line, and management guided for a stronger 2H25 as progress billings catch up.
Sales on Track – Industrial Continues to Lead
Operationally, sales momentum remained healthy with RM2.0bn achieved in 1H25, representing 56% of the RM3.6bn full-year target. Industrial products led the pack, contributing 40% of sales, followed by residential landed (25%), high-rise (22%) and commercial (10%). Industrial take-up was modest at 44%, reflecting late-June launches such as Vision Business Park and Bandar Bukit Raja i30. Importantly, unbilled sales climbed to a record RM3.9bn, the highest since demerger, providing strong visibility into FY26-27. Management remains confident of meeting, and potentially exceeding, its sales target, with residential launches set to drive a stronger 2H.
Building Recurring Income – Retail & Industrial Assets in Focus
SimeProp continues to expand its recurring income platform under engine 2 of SHIFT25. KLGCC Mall (240k sq ft NLA) is slated for a soft launch in October 2025 with 85% occupancy secured from over 80 tenants. Elmina Lakeside Mall has already turned profitable, while KL East Mall is enjoying positive rental reversions and higher tenant sales. On the industrial side, Metrohub I is fully leased, Metrohub II is 88% occupied, and Metrohub III is under construction for mid-2026 completion, with Metrohub IV-V still in design stage. In the data centre space, SimeProp has secured two hyperscale leases at Elmina Business Park worth RM7.6bn over 20 years. The first facility (49 acres) is under construction for delivery by 2H26, while the larger Phase 2 (77 acres) remains in planning, with the construction contract targeted for award by year-end.
Strategic Land & Partnerships Underpin Long-Term Growth
The Carey Island joint venture with SD Guthrie remains at feasibility and planning stage, while SimeProp’s land parcels in Gurun may be repositioned for launches under engine 3 of SHIFT25, which focuses on experiential and new growth ventures. In London, Battersea Power Station (BPS) is progressing steadily: Phase 3B residential take-up has improved 4% QoQ to 78%, Phase 3C is at the tender stage for FY26 construction, and Phase 4 design work is expected to commence by year-end. While new attractions such as NEON and cultural events like “celebrASIA” are sustaining visitor traffic, we expect BPS to remain loss-making in the near term due to high operating costs and gestation. For SimeProp, BPS is more of a long-term strategic asset that enhances branding and optionality, with Malaysian operations continuing to anchor group earnings. Balance sheet health remains a key comfort, with latest net gearing rising modestly to 31% post-sukuk issuances and completed inventories standing at RM198mn GDV (5% of total stocks), one of the lowest in the sector, reflecting disciplined product rollout.
Forecasts
No change to our FY25-27 earnings forecasts.
Valuation and Recommendation
We remain encouraged by SimeProp’s solid 2Q25 performance. The group is effectively balancing near-term revenue moderation (from holding industrial and DC assets for yield) with the steady build-up of recurring income. Record-high unbilled sales, resilient margins, and growing contributions from malls and industrial assets underpin strong earnings visibility into FY26–27.
We maintain our BUY rating with an unchanged TP of RM2.05/share, based on 1.2x CY26 P/B and incorporating a 5% ESG premium.
Share Information
- Bloomberg Code SDPR MK
- Stock Code 5288
- Listing Main Market
- Share Cap (mn) 6,800.8
- Market Cap (RMmn) 10,269.3
- 52-wk Hi/Lo (RM) 1.81/1.07
- 12-mth Avg Daily Vol (‘000 shrs) 15,177.5
- Estimated Free Float (%) 35.3
- Beta 2.1
Major Shareholders (%)
- PNB (53.6%)
- EPF (13.6%)
- KWAP (6.3%)
Forecast Revision
- FY25 FY26
- Forecast Revision (%) 0.0 0.0
- Net profit (RMmn) 586.2 627.5
- Consensus 556.6 603.6
- TA’s / Consensus (%) 105.3 104.0
- Previous Rating Buy (Maintained)
- Consensus Target Price (RM) 1.85
Financial Indicators
- FY25 FY26
- Net gearing (%) 22.6 31.3
- CFPS (sen) 0.0 (0.1)
- P/CFPS (x) 34.2 0.0
- ROE (%) 5.5 5.7
- ROA (%) 3.4 3.5
- NTA/Share (RM) 1.6 1.6
- Price/ NTA (x) 1.0 1.0
Share Performance (%)
- Price Change SDPR FBM KLCI
- 1 mth (3.8) 5.1
- 3 mth 7.9 4.6
- 6 mth (3.2) 0.4
- 12 mth 7.9 (2.7)
(12-Mth) Share Price relative to the FBMKLCI
[Chart: Share Price Performance against FBMKLCI – No image allowed per requirements]
Source: Bloomberg
Financial Statement
Income Statement (FYE 31 Dec (RM m))
| FYE 31 Dec (RM m) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Revenue | 3,436.9 | 4,250.8 | 4,545.4 | 4,721.1 | 4,803.1 |
| EBITDA | 658.6 | 956.0 | 1,107.1 | 1,176.0 | 1,230.0 |
| Depreciation | (52.2) | (56.2) | (60.2) | (64.2) | (68.2) |
| EBIT | 606.4 | 899.8 | 1,046.9 | 1,111.8 | 1,161.8 |
| Net interest income | 40.0 | 42.3 | (52.6) | (60.7) | (61.4) |
| Share of associates’ profit | 5.3 | 1.7 | (50.0) | (50.0) | (50.0) |
| Reported pretax profit | 610.3 | 780.0 | 944.3 | 1,001.1 | 1,050.4 |
| Taxation | (192.8) | (262.4) | (348.0) | (367.9) | (385.1) |
| Minority interests | (9.6) | (15.4) | (10.1) | (5.7) | (4.6) |
| Net profit | 407.9 | 502.2 | 586.2 | 627.5 | 660.6 |
| Core net profit | 439.7 | 513.3 | 586.2 | 627.5 | 660.6 |
Balance Sheet (FYE 31 Dec (RM m))
| FYE 31 Dec (RM m) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| PPE | 593.3 | 575.7 | 798.5 | 834.3 | 866.1 |
| Investment properties | 1,201.1 | 2,085.2 | 2,085.2 | 2,085.2 | 2,085.2 |
| Property development | 6,251.6 | 6,442.3 | 4,923.9 | 6,347.9 | 6,216.1 |
| Inventories | 243.4 | 134.6 | 597.2 | 620.3 | 617.0 |
| Receivables | 789.1 | 774.5 | 1,439.9 | 1,473.7 | 1,468.8 |
| JV and Associates | 3,272.1 | 2,892.8 | 2,914.8 | 2,936.8 | 2,958.8 |
| Other assets | 2,975.5 | 2,978.6 | 2,978.6 | 2,978.6 | 2,978.6 |
| Cash and ST funds | 602.6 | 640.4 | 1,756.3 | 644.8 | 1,114.8 |
| Total assets | 15,928.7 | 16,524.2 | 17,494.3 | 17,921.6 | 18,305.3 |
| LT borrowings | 2,480.7 | 1,931.8 | 2,999.7 | 2,849.7 | 2,749.7 |
| ST borrowings | 413.4 | 1,213.1 | 1,165.2 | 1,265.2 | 1,265.2 |
| Payables | 1,656.0 | 1,794.8 | 1,352.6 | 1,400.8 | 1,423.3 |
| Other liabilities | 1,095.2 | 1,087.5 | 1,087.5 | 1087.5 | 1,087.5 |
| Liabilities | 5,645.2 | 6,027.3 | 6,605.1 | 6,603.2 | 6,525.7 |
| Share capital | 6,800.8 | 6,800.8 | 6,800.8 | 6,800.8 | 6,800.8 |
| Reserves | 3,256.3 | 3,464.8 | 3,847.0 | 4,270.5 | 4,727.1 |
| Shareholders’ equity | 10,057.1 | 10,265.6 | 10,647.8 | 11,071.3 | 11,527.9 |
| Minority Interest | 226.4 | 231.3 | 241.4 | 247.1 | 251.8 |
| Total equity | 10,283.5 | 10,497.0 | 10,889.2 | 11,318.4 | 11,779.7 |
| Total equity and liabilities | 15,928.7 | 16,524.2 | 17,494.3 | 17,921.6 | 18,305.3 |
Cash Flow Statement (FYE 31 Dec (RM m))
| FYE 31 Dec (RM m) | 2023 | 2024 | 2025F | 2026F | 2027F |
|---|---|---|---|---|---|
| Pretax profit | 417.5 | 780.0 | 944.3 | 1001.1 | 1050.4 |
| Depreciation and amortisation | 52.2 | 56.2 | 60.2 | 64.2 | 68.2 |
| Change in working capital | 623.5 | 1171.2 | 872.5 | (256.9) | 1392.6 |
| Net interest paid | (73.7) | (60.4) | (52.6) | (60.7) | (61.4) |
| Tax paid | (192.8) | (262.4) | (348.0) | (367.9) | (385.1) |
| Others | (901.9) | (1189.4) | (1004.5) | (1065.3) | (1118.6) |
| Operating cash flow | (75.1) | 495.2 | 471.9 | (685.5) | 946.0 |
| Capex | (34.9) | (41.3) | (100.0) | (100.0) | (100.0) |
| Investments | (112.5) | (901.7) | 0.0 | 0.0 | 0.0 |
| Others | 76.5 | 581.2 | (72.0) | (72.0) | (72.0) |
| Investing cash flow | (71.0) | (361.8) | (172.0) | (172.0) | (172.0) |
| Issuance of shares | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| Net change in borrowings | (143.8) | 250.9 | 1020.0 | (50.0) | (100.0) |
| Dividends paid | (170.0) | (204.0) | (204.0) | (204.0) | (204.0) |
| Others | 65.3 | (141.3) | 0.0 | 0.0 | 0.0 |
| Financing cash flow | (248.5) | (94.5) | 816.0 | (254.0) | (304.0) |
| Net cash flow | (394.6) | 38.9 | 1115.8 | (1111.5) | 470.0 |
| Beginning cash | 985.3 | 602.6 | 640.4 | 1756.3 | 644.8 |
| Ending cash | 590.7 | 641.5 | 1756.3 | 644.8 | 1114.8 |
Key Statistics & Ratios (FYE 31 Dec (RM m))
| 2023 | 2024 | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| Growth (%) | |||||
| Revenue | 25.3% | 23.7% | 6.9% | 3.9% | 1.7% |
| EBITDA | 11.4% | 45.1% | 15.8% | 6.2% | 4.6% |
| Pretax profit | 33.0% | 27.8% | 21.1% | 6.0% | 4.9% |
| Core net profit | 34.4% | 16.7% | 14.2% | 7.0% | 5.3% |
| Core EPS | 34.4% | 16.7% | 14.2% | 7.0% | 5.3% |
| Profitability (%) | |||||
| EBITDA margin | 19.2% | 22.5% | 24.4% | 24.9% | 25.6% |
| Pretax profit margin | 17.8% | 18.4% | 20.8% | 21.2% | 21.9% |
| Core net profit margin | 12.8% | 12.1% | 12.9% | 13.3% | 13.8% |
| Effective tax rate | 30.3% | 33.2% | 35.0% | 35.0% | 35.0% |
| Return on assets | 2.8% | 3.1% | 3.4% | 3.5% | 3.6% |
| Return on equity | 4.4% | 5.0% | 5.5% | 5.7% | 5.7% |
| Leverage (%) | |||||
| Total debt / total assets | 18.2% | 19.0% | 23.8% | 23.0% | 21.9% |
| Total debt / equity | 28.8% | 30.6% | 39.1% | 37.2% | 34.8% |
| Net debt / equity | 22.8% | 24.4% | 22.6% | 31.3% | 25.2% |
Valuation (FYE 31 Dec (RM m))
| 2023 | 2024 | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| EPS (sen) | 6.0 | 7.4 | 8.6 | 9.2 | 9.7 |
| Core EPS (sen) | 6.5 | 7.5 | 8.6 | 9.2 | 9.7 |
| P/E (x) | 23.4 | 20.0 | 17.5 | 16.4 | 15.5 |
| EV/EBITDA (x) | 19.4 | 13.6 | 11.7 | 11.9 | 10.9 |
| Net DPS (sen) | 2.5 | 3.0 | 3.0 | 3.0 | 3.0 |
| Net dividend yield (%) | 1.7 | 2.0 | 2.0 | 2.0 | 2.0 |
| BV per share (RM) | 1.5 | 1.5 | 1.6 | 1.6 | 1.7 |
| P/BV (x) | 1.0 | 1.0 | 1.0 | 0.9 | 0.9 |
Key Assumptions (FYE 31 Dec (RM m))
| 2023 | 2024 | 2025F | 2026F | 2027F | |
|---|---|---|---|---|---|
| Annual property sales | 3,337 | 4,094 | 3,970 | 4,255 | 4,326 |
| Blended property margin (%) | 21.4 | 22.8 | 23.4 | 23.9 | 24.5 |
Sector Recommendation Guideline
OVERWEIGHT: The total return of the sector, as per our coverage universe, exceeds 12%.
NEUTRAL: The total return of the sector, as per our coverage universe, is within the range of 7% to 12%.
UNDERWEIGHT: The total return of the sector, as per our coverage universe, is lower than 7%.
Stock Recommendation Guideline
BUY : Total return of the stock exceeds 12%.
HOLD : Total return of the stock is within the range of 7% to 12%.
SELL : Total return of the stock is lower than 7%.
Not Rated: The company is not under coverage. The report is for information only.
Total Return of the stock includes expected share price appreciation, adjustment for ESG rating and gross dividend. Gross dividend is excluded from total return if dividend discount model valuation is used to avoid double counting.
Total Return of the sector is market capitalisation weighted average of total return of the stocks in the sector.
ESG Scoring & Guideline
| Scoring | Environmental | Social | Governance | Average |
|---|---|---|---|---|
| ★★★★★ | ★★★★★ | ★★★★★ | ★★★★★ | ★★★★★ |
| Remark | The group is committed to high levels of sustainability with its properties. Since 2019, it became rated under the Carbon Disclosure Project, a Global Carbon and Environmental Benchmark Rating body. | The group strives to empower cities and communities by building resilience and enhancing lives through education & healthcare; enhancing practices in the workplace. | 64% of its board members are independent, and 36% are female, meeting the Malaysian Code of Corporate Governance’s prescribed practice. It holds investor briefings regularly, demonstrating good transparency and disclosure practices. |
★★★★★ (≥80%): Displayed market leading capabilities in integrating ESG factors in all aspects of operations, management and future directions. +5% premium to target price
★★★★ (60-79%): Above adequate integration of ESG factors into most aspects of operations, management and future directions. +3% premium to target price
★★★ (40-59%): Adequate integration of ESG factors into operations, management and future directions. No changes to target price
★★ (20-39%): Have some integration of ESG factors in operations and management but are insufficient. -3% discount to target price
★ (<20%): Minimal or no integration of ESG factors in operations and management. -5% discount to target price
Disclaimer
The information in this report has been obtained from sources believed to be reliable. Its accuracy and/ or completeness is not guaranteed and opinions are subject to change without notice. This report is for information only and not to be construed as a solicitation for contracts. We accept no liability for any direct or indirect loss arising from the use of this document. We, our associates, directors, employees may have an interest in the securities and/or companies mentioned herein.
As of Monday, August 25, 2025, the analyst, Thiam Chiann Wen, who prepared this report, has interest in the following securities covered in this report:
(a) nil
Kaladher Govindan – Head of Research
TA SECURITIES HOLDINGS BERHAD 197301001467 (14948-M)
A Participating Organisation of Bursa Malaysia Securities Berhad
