PETALING JAYA: S P Setia Bhd is expected to submit plans for its proposed real estate investment trust (REIT) ahead of a targeted listing by the third quarter of 2027.
According to analysts, the group has identified several existing property investment assets ripe for value-unlocking.
CIMB Research in a recent report said: “We understand the future pipeline of assets that could potentially be injected into the REIT includes educational facilities such as a new international school in Bandar Kinrara and a purpose-built student accommodation block at the Carlton redevelopment project in Melbourne.”
However, the research house believes that the window for S P Setia to unlock optimal asset value via a proposed REIT listing is narrowing as “investors recalibrate their yield expectations in a rising interest rate environment”.
In a note to clients, TA Research said S P Setia’s REIT plans were progressing, albeit slightly behind earlier guidance.
It said the submission to the Securities Commission is now targeted by year-end, versus October previously, with listing still targeted for 2027.
The delay was partly due to a joint-venture asset earmarked for injection and efforts to improve the yield profile of the proposed portfolio.
UOB Kay Hian (UOBKH) Research, meanwhile, said S P Setia’s management, which opted to include a Johor asset jointly held with a partner, should improve the REIT’s target yield.
The indicative initial portfolio would comprise six assets valued at slightly below RM2bil, it pointed out.
Beyond the initial portfolio, the pipeline includes a student accommodation tower at Carlton in Melbourne and industrial assets from its managed industrial parks are expected to lift recurring income to about 10% of earnings by 2030.
For BIMB Research, S P Setia’s deleveraging continues with the REIT listing targeted for the third quarter of 2027 (3Q27).
The group’s borrowings fell RM402mil year-to-date, while net gearing eased to 0.30 times from 0.35 times a year ago, it noted.
The research house said the proposed REIT also offers another route to monetise assets, with the listing timeline subject to approvals and market conditions.
Meanwhile, analysts said S P Setia’s newly released 3Q26 results missed their expectations due to weak performance from the group’s property development segment.
The group’s core net profit fell 54% year-on-year and 66% quarter-on-quarter to RM30.5mil.
BIMB Research has cut S P Setia’s financial year 2026 (FY26), FY27 and FY28 revenue by 6.8%, 7.6% and 9.5%, respectively, to reflect slower domestic sales conversion and more conservative land-sale recognition assumptions.
Looking ahead, S P Setia’s management maintained its FY26 sales target of RM4.6bil, with sales reaching RM2.96bil as of Nov 10.
The management also expects some Setia Alaman transactions that missed the 3Q cut-off to be recognised in 4Q, although it did not quantify the amount.
“The Glengowrie disposal to Mah Sing Group Bhd
remains a potential 4Q contributor, subject to the Economic Planning Unit’s approval and completion,” it added.
BIMB Research maintained a “buy” call on S P Setia with a lower target price of 98 sen. It remains positive on S P Setia’s industrial land monetisation prospects at Setia Alaman and Setia Fontaines, supported by continued deleveraging and potential value realisation through the proposed REIT listing.
CIMB Research has also cut S P Setia’s FY26, FY27 and FY28 core net profit forecasts by 21%, 30% and 28% to RM254mil, RM251mil and RM292mil, respectively.
Given the challenging domestic property outlook for FY27, the research house kept its “hold” call on the counter with a lower target price of 65 sen.
Accordingly, TA Research has cut its FY26, FY27 and FY28 earnings forecasts by 37%, 39% and 27% to account for the lower sales assumptions, slower-than-expected progress billings and weaker margins
Following its earnings revisions, the brokerage lowered the stock’s target price to 85 sen, but kept its “buy” call.
