Profits are down. A sign of time, perhaps.

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If we want to understand how is the overall stock market doing in the U.S, we may want to refer to the DOW 500 or the S&P 500. It is considered a representation of the over 4,000 publicly listed companies there. Here in Malaysia, it would be our FTSE Bursa Malaysia KLCI, also known as the FBM KLCI. Please note that investing into a good stock matching what we want does NOT have to be one of the 30 stocks within the FBM KLCI.

I believe it is not possible to look into the state of the property industry if we do not see what’s happening with the few largest players in the industry. Today, we look at what has been announced by S P Setia for their Q1 2020 which ended on 31st March 2020. Movement Control Order (MCO) actually started on 18th March 2020 and has been extended till 9th June 2020 under a Conditional Movement Control Order (CMCO).

Article in focusmalaysia.com SP Setia Bhd’s net profit dipped 43.78% year-on-year (y-o-y) to RM56.12 mil for the first quarter ended March 31 from RM99.83 mil in 2019. This is said to be weighed down by the Movement Control Order (MCO) imposed to curb the Covid-19 pandemic. S P Setia said that due to the MCO, it has closed sales offices, construction sites and social activities and this had disrupted its business operations.

For the period under review, revenue also shrank 18.76% y-o-y to RM702.66 mil from RM864.91 mil previously. As for its sales targets, S P Setia said it has revised its sales target for the financial year ending Dec 31, 2020 to RM3.8 bil from RM4.55 bil set earlier. President and CEO Datuk Khor Chap Jen said in addition to the sales of RM470 mil secured in 1Q20, the group also secured RM723 mil worth of bookings in the same period. He added, “During the extended conditional MCO period, the focus will be on the swift conversion of these bookings into sales.” Please do refer to the full Article in focusmalaysia.com

I have not bought any properties from S P Setia. I also do not hold any of their shares currently. For those who wants to know what’s up or down and some details about S P Setia’s share price, do refer to the image below. The source is google. Just type ‘S P Setia share price’

The lowest price it has ever dipped to within the past 12 months was 55 sen. It is now at 76 sen. If everything else has remained as it is, the dividend yield would have been 1.32%. In other words, we should be looking at this stock for that upside potential if the market recovers and less of it as a dividend stock. Where dividend % is concerned, there are many other companies offering a higher number.

The positive from this announcement is simple. The profits are STILL at RM56 million. it’s not a loss. Secondly, S P Setia has announced a reduction in their sales target for this financial year but the number is still in the billions; RM3.8 billion to be exact. This is not the sign of everyone running away from buying a property yeah. It’s also a sign that there is still confidence but perhaps not as rosy as when they first forecasted. Happy following.

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