SPSETIA (8664) : CIMB Research retains Hold on SP Setia, awaits re-rating catalysts
KUALA LUMPUR: CIMB Equities Research said SP Setia’s results for its financial year ended Oct 31, 2014 results were in line as final core net profit made up 97% of its forecast and 101% consensus’s estimates.
It said on Wednesday new sales of RM4.6bil were 44% lower on-year and missed its full-year sales target of RM5bil by 8%.
“We fine-tune our EPS forecasts for housekeeping purposes, but keep our target price basis of a 25% discount to RNAV (lowered slightly from RM4.51 to RM4.45).
“SP Setia continues to be a Hold as the timing of its key re-rating catalyst, that is potential M&A activity, remains uncertain. Our picks for property sector exposure remain Mah Sing Group and Eco World Development,” it said.
CIMB Research said SP Setia disappointed on the dividend front as it proposed a final dividend of 5.7 sen, bringing the full year to 9.7sen, below its forecast of 12 sen.
It pointed out SP Setia recorded RM4.6bil in sales in FY14 (November 2013 to October 2014), an 8%
decline on-year. The Klang Valley was still the largest contributor to new sales (RM2.1bil or 45%), while Johor came in a distant second (RM500mil or 11%).
Penang and Sabah contributed a combined RM224mil or 5%, while overseas projects (Singapore, Melbourne and London) contributed RM1.8bil or 39%.
In the fourth quarter, sales fell 33% on-quarter to RM900mil as the third quarter was boosted by the launch of Phase 2 of the Battersea project in London. Unbilled sales increased from RM10.8bil in Q3 to RM11.1bil.
“The group is aiming to maintain sales at RM4.6bil in FY15, with a local:foreign split of 60:40. It is targeting to launch two new projects in the next financial year including Setia Eco Templer and Setia Sky Vista. Setia Eco Templer has a GDV of RM1.9bil and is a residential-cum-commercial project, with residential units priced between RM700,000 and RM2mil. Setia Sky Vista is a condo in Penang located five minutes from the Bayan Lepas Free Trade Zone, with a GDV of RM320mil,” it said.
CIMB Research pointed out that with the continued departure of many senior management personnel from SP Setia, it believed it is a matter of time before major shareholder PNB embarks on a corporate exercise to consolidate its many property holdings.
“It has been reported by the Press that this could take the form of a privatisation exercise or asset injection. However, it remains uncertain when exactly a corporate exercise will be announced, and the waiting game continues.
“Meanwhile, acting CEO Dato' Voon Tin Yow will leave SP Setia at the end of this month, to be replaced at the helm by deputy president Datuk Khor Chap Jen,” it said.
http://www.thestar.com.my
KUALA LUMPUR: CIMB Equities Research said SP Setia’s results for its financial year ended Oct 31, 2014 results were in line as final core net profit made up 97% of its forecast and 101% consensus’s estimates.
It said on Wednesday new sales of RM4.6bil were 44% lower on-year and missed its full-year sales target of RM5bil by 8%.
“We fine-tune our EPS forecasts for housekeeping purposes, but keep our target price basis of a 25% discount to RNAV (lowered slightly from RM4.51 to RM4.45).
“SP Setia continues to be a Hold as the timing of its key re-rating catalyst, that is potential M&A activity, remains uncertain. Our picks for property sector exposure remain Mah Sing Group and Eco World Development,” it said.
CIMB Research said SP Setia disappointed on the dividend front as it proposed a final dividend of 5.7 sen, bringing the full year to 9.7sen, below its forecast of 12 sen.
It pointed out SP Setia recorded RM4.6bil in sales in FY14 (November 2013 to October 2014), an 8%
decline on-year. The Klang Valley was still the largest contributor to new sales (RM2.1bil or 45%), while Johor came in a distant second (RM500mil or 11%).
Penang and Sabah contributed a combined RM224mil or 5%, while overseas projects (Singapore, Melbourne and London) contributed RM1.8bil or 39%.
In the fourth quarter, sales fell 33% on-quarter to RM900mil as the third quarter was boosted by the launch of Phase 2 of the Battersea project in London. Unbilled sales increased from RM10.8bil in Q3 to RM11.1bil.
“The group is aiming to maintain sales at RM4.6bil in FY15, with a local:foreign split of 60:40. It is targeting to launch two new projects in the next financial year including Setia Eco Templer and Setia Sky Vista. Setia Eco Templer has a GDV of RM1.9bil and is a residential-cum-commercial project, with residential units priced between RM700,000 and RM2mil. Setia Sky Vista is a condo in Penang located five minutes from the Bayan Lepas Free Trade Zone, with a GDV of RM320mil,” it said.
CIMB Research pointed out that with the continued departure of many senior management personnel from SP Setia, it believed it is a matter of time before major shareholder PNB embarks on a corporate exercise to consolidate its many property holdings.
“It has been reported by the Press that this could take the form of a privatisation exercise or asset injection. However, it remains uncertain when exactly a corporate exercise will be announced, and the waiting game continues.
“Meanwhile, acting CEO Dato' Voon Tin Yow will leave SP Setia at the end of this month, to be replaced at the helm by deputy president Datuk Khor Chap Jen,” it said.
http://www.thestar.com.my
