Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: ECMLIBRA
S P Setia Bhd
(March 12, RM4.23)
Maintain buy at RM4.26, target price at RM4.05: S P Setia announced last Thursday that it had secured the all-important investment certificate for its project in Lai Thieu Town, Thuan An District, Binh Duong Province, Vietnam. Recall that, in October 2009, the company had entered into an in-principle agreement with Investment and Industrial Development Corp (Becamex IDC Corp) for the acquisition of the 26.79-acre (10.72 hectare) land involving a cash consideration of US$16.26 million (RM55.3 million).
Under the investment certificate, Setia Lai Thieu One Member Company Ltd will be established with a charter capital of US$6.5 million to undertake the project, which will be known as Eco-Xuan Lai Thieu, for a term of 50 years.
The project entails a mixed-development comprising shophouses, terrace houses, semi-detached houses, commercial centres, club house and apartments all for sale and/or lease in accordance with the laws of Vietnam. S P Setia will commence construction works for the initial phase upon the relevant development approvals and/or permits being obtained. This is a positive development as the procurement of investment certificate in Vietnam has often been cited as reason for delay in project commencement. The project with a gross development value of RM880 million is likely to start within a year.
As such, earnings contribution will only commence from financial year (FY) ending October 2011. We have yet to factor in any contribution from this project into our earnings estimate.
Although S P Setia's share price has achieved our target price of RM4.05 (based on upper-end price-to-earnings ratio valuation of 20 times on calendar year 2010 earnings per share) since we upgraded S P Setia to a buy in December 2009, there is scope for earnings and target price upgrade given strong sales performance so far which has exceeded our expectation.
The management has also recently raised its FY10 sales target from RM1.65 billion to RM2 billion. We maintain our buy call and will review our estimates and target price when S P Setia announces its 1QFY10 results on Thursday. - ECM Libra, March 12
This article appeared in The Edge Financial Daily, March 15, 2010.
Company Name: SP SETIA BHD
Research House: ECMLIBRA
S P Setia Bhd
(March 12, RM4.23)
Maintain buy at RM4.26, target price at RM4.05: S P Setia announced last Thursday that it had secured the all-important investment certificate for its project in Lai Thieu Town, Thuan An District, Binh Duong Province, Vietnam. Recall that, in October 2009, the company had entered into an in-principle agreement with Investment and Industrial Development Corp (Becamex IDC Corp) for the acquisition of the 26.79-acre (10.72 hectare) land involving a cash consideration of US$16.26 million (RM55.3 million).
Under the investment certificate, Setia Lai Thieu One Member Company Ltd will be established with a charter capital of US$6.5 million to undertake the project, which will be known as Eco-Xuan Lai Thieu, for a term of 50 years.
The project entails a mixed-development comprising shophouses, terrace houses, semi-detached houses, commercial centres, club house and apartments all for sale and/or lease in accordance with the laws of Vietnam. S P Setia will commence construction works for the initial phase upon the relevant development approvals and/or permits being obtained. This is a positive development as the procurement of investment certificate in Vietnam has often been cited as reason for delay in project commencement. The project with a gross development value of RM880 million is likely to start within a year.
As such, earnings contribution will only commence from financial year (FY) ending October 2011. We have yet to factor in any contribution from this project into our earnings estimate.
Although S P Setia's share price has achieved our target price of RM4.05 (based on upper-end price-to-earnings ratio valuation of 20 times on calendar year 2010 earnings per share) since we upgraded S P Setia to a buy in December 2009, there is scope for earnings and target price upgrade given strong sales performance so far which has exceeded our expectation.
The management has also recently raised its FY10 sales target from RM1.65 billion to RM2 billion. We maintain our buy call and will review our estimates and target price when S P Setia announces its 1QFY10 results on Thursday. - ECM Libra, March 12
This article appeared in The Edge Financial Daily, March 15, 2010.
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