Can Sime Darby Property meet its RM2.3b sales target amid market uncertainty?

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Sime Darby Property Faces Market Challenges with RM2.3 Billion Sales Target for FY20

Sime Darby Property Bhd has set an RM2.3 billion sales target for the financial year 2020 (FY20), a figure consistent with its previous year's objective. This target is being pursued despite prevailing expectations of a subdued and challenging property market, influenced by factors such as the Covid-19 outbreak and local political instability. The company aims to navigate these conditions through strategic product offerings, cost management, and a focus on increasing recurring income, particularly from industrial developments.
Strategic Product and Pricing Approach for Revenue

The group's primary strategy to achieve its top-line revenue target involves meticulous planning of product launches, focusing on delivering the right offerings at the opportune moments and at competitive price points. This approach is designed to align with market demand, even amidst consumer hesitancy to commit to purchases due to the uncertain economic and political climate. The company exceeded its FY19 sales target, achieving RM3.18 billion, demonstrating an ability to perform in the market.
Emphasis on Cost Management and Recurring Income

For the company's bottom line, a significant focus will be placed on rigorous cost management and optimisation initiatives. Concurrently, Sime Darby Property intends to accelerate its efforts to boost recurring income. A key area for this growth is the industrial development segment, with ongoing projects in Bukit Raja and plans for further expansion in this sector.
New Project Launches and Affordable Housing Focus

Sime Darby Property anticipates launching up to 20 new projects in the latter half of FY20, representing a gross development value of approximately RM2.7 billion. These upcoming developments are slated to concentrate on affordable housing options, addressing a segment of the market that is expected to remain in demand. This strategic focus on affordability is a response to the broader market conditions and potential consumer spending constraints.
Extensive Landbank and Future Development Potential

The company possesses a substantial landbank of approximately 8094 hectares, estimated to be worth around RM85.4 billion. Of this total, about 5420 hectares are currently under active development, while an additional 2665 hectares remain undeveloped. While the group considers its current landholdings sufficient, it remains open to strategic acquisitions or joint ventures for high-yielding land opportunities.

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Can Sime Darby Property meet its RM2.3b sales target amid market uncertainty?

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