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Saturday, December 20, 2008

Depth and spread will stand SP Setia in good stead

Single storey show house in Setia Eco Gardens, Johor

SP Setia group managing director and chief executive officer Tan Sri Liew Kee Sin is a picture of confidence. “You just take a look at this,” he says, referring to the scene outside the window from his room. Pockets of green with roof tops dotting the horizon makes a pretty picture against the blue sky. He is very proud of what he has done at Setia Eco Park, about 30 minutes by car from Petaling Jaya.

“I prefer visitors to come here. They will be able to see what we have done. Eco Park is unlike any other development, with a good measure of greens, parks and lakes,” says Liew.

Several years old, Eco Park is yet to be completed but he is confident the demand for bungalows and semi-detached will be there.

“We have depth, in terms of market segments, and spread, in terms of locations. These factors alone will stand us in good stead in the next two years as the financial meltdown unwinds and we will be ahead of our peers,” he says.

Liew is reluctant to be specific about the type of products he will be offering for the coming year. “We will finalise our market plans after December, having undertaken intensive studies to change the product mix. What is certain is demand has shrunk, competition is intense and every developer will have to find market share. Other developers will see what steps we take, being one of the larger ones with a land-bank of over 4,000 acres,” he says.

The company is aiming for an internal sales target of RM1.1bil for the financial year ending October 2009, 21% lower than the RM1.4bil achieved in FY08. It also has set a minimum net profit target of RM214mil for FY09, similar to what was achieved in FY08. As of October 2008, it had unbilled sales of RM1.1bil.

“We at SP Setia will go back to basics. We have paid for all our infrastructure, we will drop non-core divisions and focus on longer term cash-generative projects,” he says.

He says the company will focus on the local middle-income group, which traditionally has been supportive. More than 90% of the company’s income are locally generated and this will remain the same, he says, although the company has work in Vietnam.

“That means our demand is from locals and from those who have made Malaysia their second home, unlike developments which are more dependent on foreign buyers,” says Liew.

The company will continue to focus on three major areas: the Klang Valley, Penang and Johor. “How we are going to shift and strategise, I don’t know yet. The next two to three months will be crucial as we chart our course,” he says, adding that the company has about 4,800 acres of undeveloped land.

He says SP Setia’s land is fully paid for. Likewise, the infrastructure. “We have no heavy capital expenditure, which means our policy today is cash preservation. If the land comes in cheap, we will buy,” he says, adding: “If there is anything to build, now is the time, with the drop in construction materials.”

By The Star (by Thean Lee Cheng)

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