30-05-2025
Analysts Back Sime Darby Property On Its Solid Pipeline Of Projects
Sime Darby Property Bhd - Ready-built Warehouse (Source Official wesite Nov 2024)
Sime Darby Property Bhd (SDPR) maintains strong analyst support with RHB Investment Bank Bhd (RHB Research) and Hong Leong Investment Bank Bhd (HLIB) both reaffirming their BUY calls. RHB Research assigns a target price of RM2.33, implying a 64% upside from the current market price of RM1.42, while HLIB maintains a slightly more conservative target price of RM2.05, projecting a 44.4% capital gain plus a dividend yield of 2.3%, resulting in an expected total return of 46.7%. The positive outlook reflects confidence in Sime Darby Property's resilient sales momentum and strategic development plans.
According to RHB Research, Sime Darby Property's first quarter of fiscal 2025 earnings fell short of expectations due to delayed recognition of some industrial property sales. Nevertheless, property sales remained robust at RM928 million, putting the company on track to meet its annual sales target of RM3.6 billion. The quarter saw industrial products contributing half of total sales, with residential high-rise, landed residential, and commercial properties making up the remainder.
RHB Research noted the upcoming launch of KLGCC Mall in the second half of 2025 and the timely delivery of two data centres as key growth drivers. The firm also highlighted improved cost efficiency and reduced finance expenses as positive factors, with net gearing slightly rising to 0.28 times.
HLIB described the first quarter results as within expectations, with core profit after tax and minority interests (PATAMI) rising 20.1% quarter-on-quarter to RM115.6 million despite a 10.8% revenue decline. This was largely attributed to better profit margins from a favourable product mix and lower compliance costs. Sales for the quarter were steady at RM927.5 million, representing about 26% of the company's full-year sales target.
HLIB also pointed to strong unbilled sales of RM3.84 billion, the highest since 2017, signalling healthy revenue visibility. The firm forecasts steady earnings growth, adjusting its FY25 and FY26 projections slightly while introducing a positive outlook for FY27 with core PATAMI expected to reach RM663.2 million.
Both research houses highlight the strength of Sime Darby Property's industrial segment, with HLIB emphasising the ongoing construction of Google's hyperscale data centre, scheduled for completion in the second half of 2026. The company's investment property portfolio is expanding, with KLGCC Mall nearing opening and strong occupancy gains in its Metrohub industrial assets. These recurring income streams are expected to boost future earnings as leasing activity remains robust.
Looking forward, analysts are optimistic about Sime Darby Property's prospects, citing its diversified product offerings across residential, commercial, and industrial sectors as a key advantage. The anticipated completion of the East Coast Rail Link (ECRL) by end-2026 is expected to benefit the company's industrial landbank near Klang station, improving sales and rental yields.
Both RHB and HLIB believe the group's balanced approach, combining development-driven growth with steady expansion of its investment property segment positions Sime Darby Property well for sustainable long-term earnings growth.
In conclusion, Sime Darby Property continues to deliver on its strategic goals with solid sales momentum and growing recurring income, backed by positive analyst ratings and substantial upside potential from current share prices. Related
