SPSETIA (8664) - SP Setia - Battersea boost to sales
Target RM2.67 (Stock Rating: REDUCE)
1Q’s results were broadly in line with expectations, as core net profit made up 15% of our full-year forecast and 20% of consensus estimates. Future quarters should be stronger due to lumpy recognition of profit contribution from Australia. New sales of RM1bn were 38% lower yoy and, if annualised, were below the group's RM4.6bn target for the year. No changes to our EPS forecasts and target price basis of 40% discount to RNAV. SP Setia remains a Reduce as the timing for potential M&A activity is uncertain. We continue to prefer Mah Sing Group and Eco World for exposure to the property sector.
1Q results in line
Annualised 1Q’s results were broadly in line with expectations, even though core net profit made up only 15% of our full-year forecast and 20% of consensus estimates. We expect future quarters to be stronger as historically, 1Q is the weakest quarter. Also, the group should recognise significant lumpy profits from its Fulton Lane project in Melbourne, Australia. No dividends were declared in 1Q, in line with expectations.
1Q sales of RM1.01bn
The group chalked up RM1.01bn sales in 1Q (three months from Nov 14 to Jan 15), representing a 38% decline yoy. 72% of group sales came from Battersea in London while only 25% was from Malaysia. Another 3% of sales came from Singapore, Australia and Vietnam combined. SP Setia will need to ramp up new launches in the coming months to meet its full-year sales target of RM4.6bn, matching the sales value achieved in FY14. Unbilled sales of the group increased from RM11.1bn in 4QFY14 to RM11.5bn in 1QFY15.
M&A activity?
The wait for potential M&A activity by SP Setia's major shareholder continues. There was a press report in Jan stating that the senior management of SP Setia mooted the idea to the top management of PNB for a takeover of SP Setia by the property arm of Sime Darby. It was reported that "there was no resistance to the proposal" and that "they see a need for a strong leadership in SP Setia for the greater benefit of shareholders". While we continue to believe that a merger or privatisation exercise will help re-rate SP Setia's share price, it is anybody's guess as to when that will take place.
Source: CIMB Daybreak - 12 March 2015
Target RM2.67 (Stock Rating: REDUCE)
1Q’s results were broadly in line with expectations, as core net profit made up 15% of our full-year forecast and 20% of consensus estimates. Future quarters should be stronger due to lumpy recognition of profit contribution from Australia. New sales of RM1bn were 38% lower yoy and, if annualised, were below the group's RM4.6bn target for the year. No changes to our EPS forecasts and target price basis of 40% discount to RNAV. SP Setia remains a Reduce as the timing for potential M&A activity is uncertain. We continue to prefer Mah Sing Group and Eco World for exposure to the property sector.
1Q results in line
Annualised 1Q’s results were broadly in line with expectations, even though core net profit made up only 15% of our full-year forecast and 20% of consensus estimates. We expect future quarters to be stronger as historically, 1Q is the weakest quarter. Also, the group should recognise significant lumpy profits from its Fulton Lane project in Melbourne, Australia. No dividends were declared in 1Q, in line with expectations.
1Q sales of RM1.01bn
The group chalked up RM1.01bn sales in 1Q (three months from Nov 14 to Jan 15), representing a 38% decline yoy. 72% of group sales came from Battersea in London while only 25% was from Malaysia. Another 3% of sales came from Singapore, Australia and Vietnam combined. SP Setia will need to ramp up new launches in the coming months to meet its full-year sales target of RM4.6bn, matching the sales value achieved in FY14. Unbilled sales of the group increased from RM11.1bn in 4QFY14 to RM11.5bn in 1QFY15.
M&A activity?
The wait for potential M&A activity by SP Setia's major shareholder continues. There was a press report in Jan stating that the senior management of SP Setia mooted the idea to the top management of PNB for a takeover of SP Setia by the property arm of Sime Darby. It was reported that "there was no resistance to the proposal" and that "they see a need for a strong leadership in SP Setia for the greater benefit of shareholders". While we continue to believe that a merger or privatisation exercise will help re-rate SP Setia's share price, it is anybody's guess as to when that will take place.
Source: CIMB Daybreak - 12 March 2015
