Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: CIMB
S P Setia Bhd
(June 18, RM4)
Maintain outperform at RM4.03 with target price of RM5.51: S P Setia's interims largely met expectations even though annualised 1HFY10/10 net profit made up 88% of our full-year forecast and 91% of consensus estimates.
This is because 2H is traditionally stronger and should make up for lost ground. 1H physical sales were robust at RM1.2 billion, ahead of its RM2 billion full-year target. We make no changes to our earnings forecasts and outperform recommendation.
Our target price remains at RM5.51 as we continue to apply a 20% premium to its fully diluted RNAV of RM4.59, given S P Setia's position as the bellwether property stock. Potential rerating catalysts include 1) continued strong sales in FY10, and 2) S P Setia's renewed appetite for land banking, domestically and internationally.
1HFY10 core net profit was broadly in line with expectations, coming in at 44% of our full-year forecast and 46% of consensus estimates. We deem the results to be in line as 2H typically contributes 55%-60% of full-year profits. We expect future quarters to make up for the shortfall, given the robust sales so far.
April 2010's sales figure of RM271 million was the third highest since the company started disclosing monthly sales. S P Setia proposed an interim dividend of six sen per share, above 1HFY09's five sen and in line with our full-year forecast of 17 sen.
1HFY10 actual sales were strong at RM1.2 billion which is 130% higher than a year earlier. 2Q sales of RM595 million nearly matched 1Q's RM608 million and were 42% higher year-on-year.
The robust sales came primarily from the Klang Valley which made up 74% of total sales. The four townships in Johor contributed 24% of sales while Penang chipped in a mere 3%. The flagship Bandar Setia Alam township, which included the niche high-end Eco Park, contributed RM639 million sales or 53% of total group sales.
S P Setia's monthly sales are holding very firm despite the 5% real property gains tax which took effect on Jan 1, 2010. Its annualised 1H sales of RM2.4 billion are 20% above its target and a whopping 45% above last year's record RM1.65 billion sales.
The strong performance is a good indication of how the industry is faring. Other developers such as Mah Sing are also enjoying brisk sales. Mah Sing's 1QFY3/10 sales of RM601 million were also a record for the group and matched S P Setia's 2QFY10 sales. ' CIMB Research, June 18
This article appeared in The Edge Financial Daily, June 21, 2010.
Company Name: SP SETIA BHD
Research House: CIMB
S P Setia Bhd
(June 18, RM4)
Maintain outperform at RM4.03 with target price of RM5.51: S P Setia's interims largely met expectations even though annualised 1HFY10/10 net profit made up 88% of our full-year forecast and 91% of consensus estimates.
This is because 2H is traditionally stronger and should make up for lost ground. 1H physical sales were robust at RM1.2 billion, ahead of its RM2 billion full-year target. We make no changes to our earnings forecasts and outperform recommendation.
Our target price remains at RM5.51 as we continue to apply a 20% premium to its fully diluted RNAV of RM4.59, given S P Setia's position as the bellwether property stock. Potential rerating catalysts include 1) continued strong sales in FY10, and 2) S P Setia's renewed appetite for land banking, domestically and internationally.
1HFY10 core net profit was broadly in line with expectations, coming in at 44% of our full-year forecast and 46% of consensus estimates. We deem the results to be in line as 2H typically contributes 55%-60% of full-year profits. We expect future quarters to make up for the shortfall, given the robust sales so far.
April 2010's sales figure of RM271 million was the third highest since the company started disclosing monthly sales. S P Setia proposed an interim dividend of six sen per share, above 1HFY09's five sen and in line with our full-year forecast of 17 sen.
1HFY10 actual sales were strong at RM1.2 billion which is 130% higher than a year earlier. 2Q sales of RM595 million nearly matched 1Q's RM608 million and were 42% higher year-on-year.
The robust sales came primarily from the Klang Valley which made up 74% of total sales. The four townships in Johor contributed 24% of sales while Penang chipped in a mere 3%. The flagship Bandar Setia Alam township, which included the niche high-end Eco Park, contributed RM639 million sales or 53% of total group sales.
S P Setia's monthly sales are holding very firm despite the 5% real property gains tax which took effect on Jan 1, 2010. Its annualised 1H sales of RM2.4 billion are 20% above its target and a whopping 45% above last year's record RM1.65 billion sales.
The strong performance is a good indication of how the industry is faring. Other developers such as Mah Sing are also enjoying brisk sales. Mah Sing's 1QFY3/10 sales of RM601 million were also a record for the group and matched S P Setia's 2QFY10 sales. ' CIMB Research, June 18
This article appeared in The Edge Financial Daily, June 21, 2010.
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