KUALA LUMPUR (Feb 28): Shares in Sime Darby Property Bhd fell as much as 9.4% this morning after the group posted its maiden quarterly loss in the second financial quarter ended Dec 31, 2018 (2QFY19) yesterday, which prompted a downgrade from Kenanga Investment Bank Bhd.

At noon, the stock was trading down 11 sen or 9.4% at RM1.06 — its lowest so far today — after 1.74 million shares exchanged hands. In the past 12 months, the share price has dropped 24.8%.

Yesterday, Sime Darby Property announced that it incurred a loss of RM347.5 million in 2QFY19 against a net profit of RM138.08 million in the previous year's corresponding quarter.

However, 2QFY19 revenue was 12.1% higher at RM788.81 million compared to RM703.63 million a year earlier.

The property developer attributed the sharp decline in performance to gains on disposal of a subsidiary and associate recorded in the previous year, as well as high impairment of inventories, negative contribution from its Battersea project, and a higher tax provision.

For the cumulative six months (1HFY19), its net loss stood at RM318.7 million against a net profit of RM559.77 million in the preceding year. Revenue for the period increased 7.9% to RM1.27 billion, from RM1.18 billion.

In a note today, Kenanga Investment Bank Bhd head of equities research Sarah Lim Fern Chieh downgraded her call on the stock to "market perform", from "outperform", with an unchanged target price of RM1.10.

"Although earnings came in weaker than expected which we will seek further clarification today, we note that sales momentum remains healthy, which is commendable given the challenging environment," she said.

"Going forward, we believe launches will still be from ongoing townships with emphasis on affordable housing, the industrial land sales in Bukit Raja and clearing of inventories.

"We are also expecting sale of Battersea Phase 2 Commercial to be finalised soon," Lim added.