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Thursday, December 11, 2008

SP Setia embarks on three-pronged strategy

KUALA LUMPUR: SP Setia Bhd is embarking on a flexible three-pronged business model based on cash conservation and generation as it gears up for a challenging year.

The first stage would see it focusing on the middle-income segment locally, which is underpinned by relative job security, supportive demographics and high household savings, the developer said yesterday.

The second part of its strategy will see the company planning marketing strategies and events that are effective and cost-efficient.

The third prong will see SP Setia undertaking judicious implementation of its development plans.

The focus will be on projects that has the least hurdles to take-up rates, the quickest turnaround period and which increase the value of the surrounding area.

SP Setia said the model would enable it to continue to fund its operations, invest in longer-term, yield-accretive projects as well as allowing it to grab good opportunities that might come during these uncertain times.

Group managing director Tan Sri Liew Kee Sin said the company was well-placed to ride out the storm due to its diverse range of strategically-located properties ranging from affordable to mid and high-end segments.

“Our experience during the Asian financial crisis (of 1997/98) and other downturns over the past 10 years has shown that the middle-market segments in Malaysia is very robust,” he said at a press conference to announce its earnings for the financial year ended Oct 31, 2008.

With almost 80% of its land bank in Malaysia under the Setia brand, Liew said the company could easily re-focus on its forte of township development and develop affordable products to suit current market demand.

SP Setia, he said, had a strong balance sheet with RM593mil cash and net gearing of 0.19 times.

SP Setia posted a net profit of RM76.08mil for the fourth quarter ended Oct 31 compared with RM99.78mil a year earlier. Revenue was at RM420.75mil compared with RM317.16mil previously. It proposed a 10 sen dividend per share.

For the financial year ended Oct 31, it posted a net profit of RM213.46mil compared with RM260.07mil a year ago. Revenue was higher at RM1.33bil compared with RM1.15bil.

SP Setia said the drop in profit in FY08 was attributed to lower gross margins and general overheads, as well as marketing expenses.

But despite the trying times and perceived soft market sentiment, total group sales were higher, Liew noted. “This reflects our ability to successfully capture housebuyers’ changing lifestyle needs and aspirations,” he said.

Liew said SP Setia’s profit and revenue were derived from property development in key projects such as Setia Alam and Setia Eco Park.

The group has 10 active projects and 3,975 acres of undeveloped land bank with a gross development value of RM16.5bil.

By The Star (by Eileen Hee)

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