Maybank Research retains buy on SP Setia, TP RM1.39


Maybank Investment Bank Research is positive on SP Setia's strategy to monetise non-core landbank to fund future/existing developments or pare down its debt.

KUALA LUMPUR: Maybank Investment Bank Research is maintaining its buy call on SP Setia and target price of RM1.39 after the property company decided to monetise non-core landbank to fund future/existing developments or pare down its debt.

In a research note on Monday, the research house said SP Setia was selling 959.7 acres of agricultural land in Tebrau, Johor to Scientex for RM518.1mil (average RM12.39 psf).

The selling price is 7% higher than the market value of RM480.8mil opined by an independent registered valuer.

The land sale will be completed in three phases, i.e. 1Q 2022 (phase 1; 451.7acres; RM236.1m or RM12 psf), 2Q 2023 (phase 2; 259.5 acres; RM141.3mil or RM12.50 psf) and 2Q 2024 (phase 3; 248.6 acres; RM140.8mil or RM13psf).

“The land sale is expected to result in a RM290mil net disposal gain, to be recognised between 2022 and 2024.

“We adjust our FY22/23 earnings forecasts by 19.7- 20%. We keep our TP unchanged at RM1.39 (on 0.4 times FY21 price-to-book value), ” it said. Last Friday, it closed at RM1.06.

Maybank Research noted that according to SP Setia’s 2020 corporate slides, the latter had identified 1,295 acres of land located in KL, Selangor and Penang for disposals (excluding the latest land sale).

These parcels of land have an estimated market value of RM1.96bil. The land disposal is expected to churn out a disposal gain of RM290mil spread over 2022-2024.

“We raise our FY22/23 earnings forecasts by 19.7%/20% to factor in the land sale. As at December 2020, SP Setia’s net gearing stood at 0.59 times, ” it said.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

SP Setia , Scientex , Maybank Research , land sale

   

Next In Business News

Hong Leong Bank launches virtual hackathon Asean edition focused on ESG
Growth in China's July services activity speeds up, but risks loom
Singapore banks report strong profit growth, loan losses decline
Asian shares near one week highs but Delta woes mount
Political worries send KLCI below 1,500 again
Quick take: Pecca succumbs to profit taking
Quick take: Hartalega shares rise on earnings beat
Falling ASP casts doubt on Hartalega's outlook
Trading ideas: Hartalega, Dufu, HB Global
Infineon production outages in Malaysia compound automotive chip supply crunch

Stories You'll Enjoy


Vouchers