PETALING JAYA: Property developer S P Setia Bhd is expected to push its financial performance in the second half of financial year 2026 (2H26) through land sales for data centres (DCs) as well as launching more commercial and industrial projects.
Analysts have mixed views on the company’s outlook following the release of its second quarter ended June 30, 2026 (2Q26) results that saw domestic sales contribute over 90% of revenue.
UOB Kay Hian Research maintained a “buy” call on the stock but with a lower target price (TP) of RM1.06 from RM1.22 on earnings projections that have been cut by 24% for financial year ending Dec 31, 2026 (FY26), and cuts of 6% and 3%, respectively, for FY27 and FY28 after factoring in lower residential revenue.
The research house said the profit before tax margin improved by 25% for the company’s property development segment in 2Q26 after recognising land sales but noted that core profit after tax and minority interests (Patami) were below expectations and that for 1H26, core Patami accounted for 30% of FY26 consensus.
It added that land sales and an accelerated launch of commercial and industrial projects would support the company’s performance and cushion the softer demand from residential sales.
According to S P Setia, sales in 2H26 would be driven by projects in Vietnam, maiden industrial sales from Setia Fontaines and the launches of Carlton Land in Melbourne and St Leonards in Sydney, Australia, in 4Q26.
As of Aug 7, RM1.68bil worth of projects have been launched, with RM2.75bil scheduled for the rest of 2026.
The company’s management also shared that the Battersea project’s phase 3C has made good progress, with remaining completed inventory from earlier phases largely cleared, while 50 Electric Boulevard reached 53% occupancy versus 45% in 1Q26.
Kenanga Research pointed to the stock as one of its top picks among property stocks with an “outperform” call, viewing the recent sell-down as likely overdone given improving future prospects and the shares trading at 80% discount to revised net asset value (RNAV).
It has a TP of RM1.43, implying 60% discount to RNAV but believes the company remains well positioned in the market to capture the shift in market dynamics favourable towards higher-end developments, bolstered by ongoing proposed real estate investment trust listings expected to materialise by 2Q27.
“Meanwhile, we also expect better performance from its joint venture projects in the medium to long-term as positive traction gradually picks up,” it said, adding that stronger sales and revenue contribution can be anticipated in the year ahead from unbilled sales of RM4bil, stronger planned launches worth RM2.75bil and RM500mil property sales recognition in 2H26 from Vietnam.
Hong Leong Investment Bank Research has maintained a “hold” call on the stock with a lower TP of 80 sen from RM1 based on a higher discount of 80% (from 75%) to our estimated RNAV of RM3.98.
To factor in lower sales assumptions, it has also lowered forecasts by 13.7% for FY26, with FY27 and FY28 to see a 5.9% and 4.7% drops, respectively.
It sees rising downside risk to earnings beyond the period supported by land-sale recognition that can lift profitability meaningfully.
“This poses a longer-term earnings risk, particularly as management has guided for land sales to taper from FY26 onwards, while domestic residential sales could also begin to moderate,” it added.
TA Research shared that the company’s management has maintained a sales target of RM4.6bil in FY26 despite 1H26 sales of RM1.42bil.
Furthermore, it has cut FY26 earnings forecast by 21%, with projections for FY27 and FY28 lowered by 17% and 9%, respectively.
