SP Setia outlook remains stable


“We believe the outlook for SP Setia remains stable premised on its strong unbilled sales of RM10.95bil and overseas contribution beginning 2020,” AmInvestment said in a note.

PETALING JAYA: The outlook for SP Setia Bhd remains stable, with the property developer’s earnings in financial year 2019 (FY19) to be driven by higher sales, said AmInvestment Research.

The higher sales would be on the back of the stamp duty waiver, inventory clearing efforts and lower interest expenses as a result of repayment of borrowings from the sale of Battersea Phase 2 commercial assets, it said.

“We believe the outlook for SP Setia remains stable premised on its strong unbilled sales of RM10.95bil and overseas contribution beginning 2020,” AmInvestment said in a note.

The research house has maintained its “buy” recommendation on the counter, as well as its FY19–FY21 net profit forecasts at RM352.9mil, RM402.8mil and RM462.0mil, respectively.

It also kept its fair value unchanged at RM2.39 per share.

“We met the company’s management for updates during a recent meeting. Despite the lacklustre property market in Malaysia, SP Setia believes that demand remains strong for owner-occupied landed residential properties in established townships,” AmInvestment said.

It noted that the company’s most recent launches, Setia Safiro Phase A1 and Setia Mayuri Phase 1, were sold out during their launches in July 2019.

Meanwhile, the launch of the Clarino double-storey terrace houses priced from RM649,000, in the Alam Impian township in March 2019, achieved a take-up rate of 98% within a month.

Moving forward, the research house noted that SP Setia planned to launch projects with a gross development value (GDV) of about RM6.8bil in FY19, focusing mainly on the Klang Valley and Johor.

The company, it added, was maintaining its sales target of RM5.65bil for FY19.

SP Setia has launched projects worth RM339mil in GDV up to the first quarter of 2019, comprising mainly landed residential properties.

The company recorded new sales of RM718mil in the first quarter, whereby 94% were derived from local projects.

On the group’s 40% stake in the Battersea project, AmInvestment said demand for the residential units had been encouraging with sales of £120mil over the past 12 months.

Phase 2 of the project, which comprises 255 apartments, has a GDV of about RM3.8bil and is expected to be completed by the end of 2020.

“So far, more than 90% of Phase 2 residential properties have been sold,” the research house said.

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