SP Setia keeps sales target

About 82% of its sales in the nine months to September 2020 came from local projects in the central (RM1.36bil), southern (RM306mil) and northern regions (RM160mil). The remaining were from overseas projects such as UNO Melbourne, Sapphire by The Gardens and Marque Residence in Australia as well as Daintree Residence in Singapore.(File pic)

PETALING JAYA: SP Setia Bhd’s management is keeping its sales target at RM3.8bil for 2020 after achieving 75% of the target as at Oct 20, according to UOB Kay Hian Research.

The group’s property sales rebounded to RM1.38bil in the third quarter, after a low of RM405mil in the second quarter.

About 82% of its sales in the nine months to September 2020 came from local projects in the central (RM1.36bil), southern (RM306mil) and northern regions (RM160mil).

The remaining were from overseas projects such as UNO Melbourne, Sapphire by The Gardens and Marque Residence in Australia as well as Daintree Residence in Singapore.

The research firm said SP Setia is backed by 8,653 acres of remaining land bank as at Sept 30,2020, and the group’s unbilled sales of RM9.82bil would keep earnings intact for the next two to three years.

Meanwhile, the property developer also made another RM336.6mil of impairment in the third quarter for its 40%-owned joint venture in Battersea Project Holdings, after recognising RM145.9mil in impairment on its domestic projects in the second quarter.

The group made the impairment amid challenges arising from the Covid-19 pandemic and the impact on the delivery of the Battersea Power Station project in London.

UOB Kay Hian Research opined that due the Covid-19 pandemic, the final completion of Phase 2 and Phase 3A of the Battersea Power Station project would be delayed towards end-2021 and first half of 2022, compared with the initial target in the second and third quarter of 2021, respectively.

For the third quarter, SP Setia reported core net profit of RM73.5mil and revenue of RM1.1bil (19.1% drop year-on-year or y-o-y), on the back of normalised progress billings with the end of the movement control order (MCO).

For the nine months under review, revenue declined 32.5% y-o-y to RM2.1bil while core net profit was RM118.6mil (47% drop y-o-y), accounting for 72.8% and 85% of UOB Kay Hian Research’s and consensus full-year forecasts respectively.

Maybank Investment Bank (IB) Research noted that SP Setia is maintaining its 2020 sales target as it has RM1.7bil in secured bookings, pending the conversion into sales.

It noted that the group has been carefully launching new units amid a weak economic outlook.

Meanwhile, CGS-CIMB Research said SP Setia’s 2020 sales target should be achievable, given the pick-up in sales momentum post-MCO and a good product mix skewed towards landed homes.

The research unit said it is positive on SP Setia, given the latter’s attractive valuation, massive land bank to cater for changes in consumer preferences, and anticipated earnings improvement in the next two years.