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S P Setia Bhd FY20 results are black and red too

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Property developer S P Setia Bhd has just announced their FY20 results and it’s both black and red at the same time.

For Chinese, red is an auspicious colour, more so during the Chinese New Year where everything is in red. Black is not a good colour to wear during the Chinese New Year. However, in the financial world, ‘return to black’ is a positive description while, ‘results are in red’ meant that the company is suffering from losses. Thus sentences such as ‘always in the black’ is a very positive one while ‘always in the red’ means this is a company which investors may want to avoid.

Article in theedgemarkets.com For Q4 FY20, property developer S P Setia Bhd was back in the black with a net profit of RM55.49 million. This is versus a net loss of RM263.43 million in the immediate preceding quarter. On a year-on-year (y-o-y) basis, the group saw its net profit for 4QFY20 drop by 24.03% y-o-y to RM55.49 million, from RM73.04 million in 4QFY19.

For the full financial year, however, the property developer was in the red with a net loss of RM321.03 million, from a net profit of RM353.75 million in the previous financial year. In a separate statement, the group noted that if one were to exclude provisions from its Battersea project in the UK, it would have had a profit before tax of RM319.2 million for the entirety of FY20. Please do refer to the full article for more detailed explanation. Article in theedgemarkets.com

Foreign exposure is less predictable versus the local developments

Battersea project is a super huge project and thus any delay caused by unforeseen circumstances is likely to weigh heavily on S P Setia’s numbers. This also meant that should situations become better and their UK project starts to deliver, we would see a huge contribution from it to the overall number too. Let’s hope with the vaccinations in both the UK and Malaysia, things will continue to get better for S P Setia and all of us too. Happy understanding.

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