Back

Three-Pronged Approach to Enhance UEM Sunrise’s Business and Ensure Sustainable Long Term Growth

Following its Ninth Annual General Meeting (“9th AGM”) today, UEM Sunrise Berhad (“UEM Sunrise” or the “Company”) remains committed to its three-pronged strategy to sail through the downturn in the property market, enhance its business and ensure sustainable long term growth. Moving ahead, the Company will focus on three priorities. The first is to strengthen its reputation as a value-driven developer, the second is to nurture a service-oriented culture within the organisation, and the third is to diversify its geographical base and adjacent businesses.

Despite the soft economic landscape and stricter lending environment, there remains pockets of opportunity for UEM Sunrise to create value and meet changing market demands. For example, in 2016, the Company leveraged its existing landbank to develop double-story terrace houses in both the Southern and Central regions to meet increased market demand for mid-market landed properties.

In doing so, UEM Sunrise was able to achieve a healthy take-up rate for the properties, which boosted Group revenue for the financial year ended 31 December 2016 (“FY2016”) to RM1.8 billion, a 5.2% increase compared to the previous year. The Company has also exceeded its sales target of RM1 billion for the year, hitting sales of RM1.36 billion, 37% higher than its revised target.

Although profit after tax and non-controlling interest (“PATANCI”) dropped to RM147.3 million, mainly due to lower contribution from other income and share of results of joint ventures and associates, UEM Sunrise ended the year on a strong financial footing, with RM4.1 billion in unrecognised revenue, providing resilient earnings’ visibility for at least the next two to three years.

Anwar Syahrin Abdul Ajib, Managing Director/Chief Executive Officer of UEM Sunrise said that he is pleased with the results despite having taken a more conservative approach in the current challenging market. He attributes the Company’s resilience to its ability to adapt quickly and create products suited for the current market, and its strong and active engagement with customers.

“Companies need to constantly review their business offerings against market demands, and tailor their business streams accordingly in order to provide the best service to their customers. To this end, we made a strategic decision to postpone a number of our launches given the weak market sentiment, including the launch of our international high-rise project on St Kilda Road, Melbourne, Australia. As a result, we were able to revamp the entire development plan to collaborate with world-renowned Zaha Hadid Architects to generate higher value.”

Anwar added that the Company also chose to focus on affordable and mid-market developments, which remained the most popular property choice among Malaysian buyers. As a result, the Company successfully introduced close to RM560 million worth of mid-market properties, which included Melia Residences in Gerbang Nusajaya and Camellia in Serene Heights Bangi. These properties were all well-received by the market, and enjoyed high take-up rates.

The company announced on 17 May 2017 its financial results for the first quarter ended 31 March 2017 (“Q1 2017”) where total revenue achieved for the period increased to RM541.8 million as compared to RM257.8 million recorded for the first quarter in 2016 (“Q1 2016”). PATANCI stood at RM61.3 million in Q1 2017 compared to RM3.0 million recorded in Q1 2016.

Strong property development activities translated to the results with total property development revenue of RM500.3 million achieved for the quarter compared to RM230.3 million in Q1 2016. Projects in the Central region contributed the highest; 41% of the property development revenue, mainly from Residensi22 in Mont’Kiara followed by 35% from the Southern region largely backed by Teega in Puteri Harbour. Aurora Melbourne Central and Conservatory both in Melbourne, Australia contributed the remaining 23%. Unrecognised revenue as at 31 March 2017 stood at RM3.7 billion compared to RM4.7 billion as at 31 March 2016.

On UEM Sunrise’s strategy moving forward, Anwar said, “We recognise that customer experience is crucial to building our brand value, and so we will continue to focus on creating a customer-centric mindset within the organisation. We want to engage our customers more and to do more to keep them happy. This means we will not only be bringing new quality developments that will enhance the lives of residents to the market, but we will also continually review our completed developments to find ways of further improving and fine-tuning them.”

UEM Sunrise is also planning to diversify its geographical base and product offerings by venturing into both the mid and exclusive property markets. The Company has products in Malaysia that are ready to be launched in 2017 namely Dahlia in Serene Heights Bangi; Solaris Parq Residences in Solaris Dutamas, Kuala Lumpur and Serimbun in Bukit Indah, Johor.

On the international front, the Company is planning to launch its third development in Melbourne, Australia – Mayfair, St Kilda Road, in the second half of 2017. Mayfair, which targets an equal mix of local and foreign buyers from the ultra high-end market, is designed by Zaha Hadid Architects.

These developments are part of the RM1.7 billion pipeline of projects that UEM Sunrise is planning to launch in 2017. The Company’s sales target for this year is RM1.2 billion. These launches will contribute to the future cash flow of the Company, and enable it to strengthen its position as a reputable developer.

Anwar explains that geographical diversity will help reduce the Company’s market risk and strengthen its revenue profile. As such, UEM Sunrise will continue to explore acquisitions of more land banks in Melbourne where it has performed well, as well as other parts of Australia and international spaces that fit its brand profile.

In concluding, Anwar reiterated that, “UEM Sunrise understands the current climate and trends, and will continue to work hard to navigate the challenges to our best ability and leverage any opportunities we find. I am confident that our three-pronged approach of strengthening our reputation as a value-driven developer, nurturing a service-oriented culture, and diversifying our geographical base, will put us in good stead to build a sustainable and profitable business for the long term. Despite the current market challenges, we remain steadfast in our vision and commitment to deliver sustainable communities that will enhance the lives and quality of living within our built environment.”