MBSB Research said embracing environmental, social and governance principles is a pathway to long-term value creation for S P Setia.
PETALING JAYA: S P Setia Bhd’s long-term prospect is expected to be partly lifted by the growing exposure to industrial property development.
MBSB Research said it came away from its visit to the Setia Alam township and Setia Alaman Industrial Park feeling positive about the prospects of the modern township and green industrial park of S P Setia.
The research house said S P Setia is targeting to grow its industrial development segment with the aim of 30% earnings contribution from industrial projects in the long run.
Key industrial parks of S P Setia include Setia Alaman Industrial Park in the central region, Setia Fontaines Industrial Park in Penang and Tanjung Kupang Industrial Park in Johor.
“Setia Alaman Industrial Park is on 399 acres of land in Bukit Raja with a gross development value (GDV) of RM4bil.
“Total sales contribution from Setia Alaman Industrial Park is RM859mil since 2023, with pipeline sales of RM319mil for the financial year 2025 (FY25), contributed mostly by land sales.
“Meanwhile, S P Setia is building a ramp to improve accessibility at Setia Alaman Industrial Park,” the research house said in a report yesterday.
MBSB Research said the development of Setia Alaman Industrial Park is progressing well with recent collaboration with Ally Logistic Property Co Ltd (Taiwan) to develop a smart warehouse campus with a target GDV of RM2.5bil.
“The warehouse will be on a built-to-lease structure, aiming to commence construction in FY26.
“In the longer run, the asset is expected to contribute to recurring income for S P Setia, and it could be injected into real estate investment trusts (REITs) in the future,” the research house said.
As part of the sustainability roadmap of S P Setia, it said Setia Alaman Industrial Park is designed as a green industrial park.
Key aspects of the green industrial park include solar on rooftops, rainwater harvesting, green lease clauses, district cooling readiness, advanced wastewater treatment, use of low-carbon cement and access to green finance.
“Note that green finance is financing for green projects with incentives such as a reduction in the financing rate when key performance indicators on sustainability are met.
“On the other hand, key sustainability features for residential development of S P Setia include parks on waterways to increase green space, tree planting, biodiversity conservation, green building and township certification, solar panels, and Setia eGreen Living features with nine green features for homebuyers,” MBSB Research said.
According to the research house, embracing environmental, social and governance principles is a pathway to long-term value creation for S P Setia.
It has a “buy” call on S P Setia with a target price of RM1.26 from RM1.25, as it updated its revised net asset value (RNAV) valuation.
MBSB Research narrowed its RNAV discount slightly to 68% from 70% due to the optimistic prospect for S P Setia’s industrial property development.
“Long-term prospects for S P Setia will be partly lifted by the growing exposure to industrial property development.
“Besides, the listing of a REIT, which is targeted by 2026, will help S P Setia to have better capital management,” it added.
