SIMEPROP: Property Developer Reports Weaker Earnings, Sales Momentum Sustained

PublicInvest Research maintained its “Outperform” call on a prominent property developer, despite the company reporting fourth-quarter and full-year net profits that fell below market and internal expectations. The investment bank affirmed its target price of RM1.55, valuing the stock near parity to its book value, driven by strong sales momentum and improving earnings quality.

Performance Review

For the fourth quarter of fiscal year 2025 (4QFY25), the developer recorded a net profit of RM87.6 million, marking a 1.0% year-on-year decline and a significant 47.9% quarter-on-quarter drop. This performance was attributed primarily to lower-than-expected profit margins, shifts in product mix, and slower-than-anticipated billings. The group’s full-year FY25 net profit reached RM517.8 million, representing a 3.1% increase year-on-year, though it still fell slightly short of both PublicInvest Research’s and consensus estimates (91% and 90% respectively).

The property development segment experienced a 2.9% year-on-year decline in revenue to RM3.89 billion in FY25, with segment profit decreasing by 3.8% year-on-year to RM783.9 million. This was largely due to a strategic shift in product mix, favoring high-rise residential products over industrial and residential landed products, alongside reduced contributions from non-core land sales. Conversely, the investment and asset management (IAM) segment saw a robust 32.2% year-on-year revenue increase to RM183.9 million, achieving a significantly narrower loss of RM4.9 million in FY25 compared to a RM65.1 million loss in FY24. This improvement was bolstered by stronger retail performance and positive lease reversion across key properties.

Sales Momentum and Unbilled Orders

Despite the earnings miss, the developer demonstrated strong sales performance, securing RM4.2 billion in sales for FY25. This achievement comfortably surpassed its annual target of RM3.6 billion by 17%. Industrial products were the largest contributor to sales at 36% (RM1.5 billion), followed by residential landed (26%) and high-rise products (24%), with commercial products accounting for 13%. As of December 31, 2025, unbilled sales remained resilient at RM3.9 billion, providing significant earnings visibility for the next three years.

Future Outlook and Recommendation

Looking ahead to FY26, the developer has set an ambitious sales target of RM4.0 billion. The company plans to launch products with a total Gross Development Value (GDV) of approximately RM4.7 billion, encompassing both local and international markets.

PublicInvest Research maintained its “Outperform” rating for the stock, with its target price holding firm at RM1.55. The bank’s positive outlook is underpinned by the developer’s sustained sales momentum and the improving quality of its earnings, despite adjustments to FY26/27 forecasts by 6% and 5% respectively, to account for revised billings and product mix.