SIMEPROP: Property Developer’s Robust Sales Drive Earnings Momentum

Sime Darby Property (SDPR) has reported a strong performance for the third quarter of 2025 (3Q25), with its earnings meeting market expectations. The positive results were largely propelled by robust property sales momentum and improved contributions across key business segments, signaling healthy growth ahead.

Performance Highlights

The company achieved substantial property sales totaling MYR3.4 billion, representing 93% of its FY25 sales target of MYR3.6 billion. This impressive momentum was particularly evident in 3Q25, where total sales spiked to MYR1.4 billion, a notable increase from MYR1.07 billion recorded in the preceding quarter (2Q25). The property development segment was the primary contributor to the higher sequential revenue, benefiting from accelerated billings from major projects. Additionally, the property investment segment reported better quarter-on-quarter growth, driven by enhanced revenue from concession arrangements and retail properties. Unbilled sales have also seen a healthy increase, climbing to MYR4.1 billion from MYR3.9 billion as at 2Q25.

Navigating Challenges

Despite the strong operational performance, SDPR’s net gearing saw a marginal rise to 0.34x from 0.31x. This increase was primarily attributed to new borrowings undertaken to fund ongoing data centre (DC) projects and a strategic land acquisition in Melbourne. Management reassured that net gearing is expected to remain capped below 0.5x. Furthermore, the London market continues to present challenges, particularly concerning the Battersea Power Station (BPS) project. Leasing for Phase 3B office building 50 Electric Boulevard remained unchanged at 45% since the last quarter, and management anticipates that losses from BPS will persist due to the slow progress of the project and softer utilization.

Positive Outlook and “Buy” Rating Affirmed

The outlook for Sime Darby Property remains positive, with management confidently expecting FY25 property sales to surpass its conservative MYR3.6 billion target. This optimism is reinforced by a strong pipeline of MYR1.5 billion worth of new projects slated for launch in 4Q25, adding to the current total bookings of MYR1.5 billion as of mid-November 2025. Crucially, stronger recurring income contributions from the Investment & Asset Management segment, anticipated from the second half of 2026 onwards, are expected to significantly boost future earnings. In light of these factors, RHB Investment Bank has maintained its “BUY” recommendation for SDPR, with a target price of MYR2.33, implying a substantial 75.2% upside from its last traded price of MYR1.33. This target price incorporates a 25% discount to RNAV and a 4% ESG premium.