Sunway Bhd, one of Malaysia’s largest conglomerates with core interests in real estate and construction, today reported revenue of RM1,091.3 million for the current quarter ended 31 March 2017, an increase from a revenue of RM1,069.0 million for the corresponding quarter in the previous year, representing a steady start for the Group.
The revenue in the current quarter was higher due to increased contributions from most business segments including property investment, construction, trading and manufacturing, quarry, healthcare, building materials and Group treasury operations.
The property development segment reported revenue of RM143.3 million and profit before tax of RM25.1 million in the current quarter, compared to revenue of RM234.1 million and profit before tax of RM69.1 million in the corresponding quarter of the previous financial year.
Revenue in the current quarter was lower mainly due to lower sales and progress billings from local development projects. In addition, no sales was recorded for the Group’s wholly-owned Avant Parc project in Singapore in the current quarter, as the project was fully sold in the second quarter of 2016. As a result, the current profit before tax was correspondingly lower.
The property investment segment reported revenue of RM186.9 million and profit before tax of RM31.1 million in the current quarter, compared to revenue of RM169.2 million and profit before tax of RM33.5 million in the corresponding quarter of the previous financial year.
The higher revenue in the current quarter was mainly due to additional revenue from the new Sunway Velocity Mall, which was opened in December 2016. Profit before tax was slightly lower, however, due to higher opening and operating expenses incurred for Sunway Velocity Mall. Sunway Velocity Mall recorded a sign-up occupancy rate of 95% as at 31 December 2016.
The construction segment recorded a higher revenue of RM316.8 million and profit before tax of RM36.9 million in the current quarter, compared to revenue of RM311.4 million and profit before tax of RM37.7 million in the corresponding quarter of the previous financial year. The financial performance of this segment in the current quarter was largely in line with the corresponding quarter of the previous financial year. The year to date construction order book replenishment is at RM 894 million.
“Whilst the overall property market remains relatively slow, the steady performance of the other segments and recurring income from the property investment segment provide good earnings visibility for the Group. The robust growth rate of the Malaysian economy in the first quarter of 2017, coupled with the improving global economic forecast by IMF augurs well for the Group, which is well-positioned to benefit from any better than expected growth from the domestic economy. Barring any unforeseen circumstances, the Group is expected to deliver a satisfactory performance in the next quarter,” said Chong Chang Choong, CFO of Sunway Berhad.
Sunway Berhad continues to maintain a strong balance sheet and low-gearing of 0.43 times with a strong construction outstanding order book of RM4.6 billion and property unbilled sales of RM1.4 billion which will provide earnings visibility for the division over the next 1-2 years.
The property development segment is also positioned to pursue strategic landbanking when the opportunity arises. In February this year, it acquired a 8.45-acre land directly opposite the Group’s RM4.0 billion Sunway Velocity development.