Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 5, RM6.35)
Maintain buy at RM6.30 with target price RM6.90: We like S P Setia Bhd for its proven track record and hands-on management. We expect a strong 36% earnings per share compound annual growth rate over the next three years, riding on the current positive property demand and overseas expansion. Also, we are increasingly positive because we expect S P Setia to gain further traction in government land development. With its significant size, it could turn acquisitive soon. We reiterate our 'buy' call with unchanged RM6.90 target price (10% premium to RM6.28 realisable net asset value).
We are excited over the RM6 billion KL Eco City development given its excellent connectivity (one station integrating KTM, LRT and MRT lines) and accessibility (mid-point between KL-PJ-Bangsar-Cheras-Sunway), supported by 30 million visitors per year from Mid Valley City. A 10% increase in the estimated RM6 billion gross development value would add two sen to its RNAV per share. S P Setia is now finalising a few office en bloc sales (close to RM1 billion) and we expect it to seal the deals soon.
Management has indicated its intention to grow the company organically or via M&As. This could spark another round of M&As in the property sector, involving assets held by its major shareholder, PNB (31% stake). This will boost S P Setia's asset size which has descended to No 2 post the UEM Land Holdings Bhd-Sunrise Bhd merger. However, we believe possible moves within this space at this juncture will be mostly direct land acquisitions.
We are expecting a 36% EPS CAGR between FY11 and FY13, driven by: (i) flagship residential projects, for example, Setia Alam and Setia Eco Park; (ii) RM11 billion worth of commercial project launches at KL Eco City and Setia City; (iii) overseas expansion, to Melbourne, Australia, and Vietnam; and (iv) RM1.8 billion unbilled sales as at Oct'' 2010, or one time our FY11 forecast.
We value S P Setia at RM6.90, based on a 10% premium to our RM6.28 RNAV, for its proven track record and hands-on management. The company traded at a 10% to 20% premium to its RNAV during the previous bull market. At RM6.90, S P Setia will trade at 27 times 2011 price earnings ratio. ' Maybank IB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 5, RM6.35)
Maintain buy at RM6.30 with target price RM6.90: We like S P Setia Bhd for its proven track record and hands-on management. We expect a strong 36% earnings per share compound annual growth rate over the next three years, riding on the current positive property demand and overseas expansion. Also, we are increasingly positive because we expect S P Setia to gain further traction in government land development. With its significant size, it could turn acquisitive soon. We reiterate our 'buy' call with unchanged RM6.90 target price (10% premium to RM6.28 realisable net asset value).
We are excited over the RM6 billion KL Eco City development given its excellent connectivity (one station integrating KTM, LRT and MRT lines) and accessibility (mid-point between KL-PJ-Bangsar-Cheras-Sunway), supported by 30 million visitors per year from Mid Valley City. A 10% increase in the estimated RM6 billion gross development value would add two sen to its RNAV per share. S P Setia is now finalising a few office en bloc sales (close to RM1 billion) and we expect it to seal the deals soon.
Management has indicated its intention to grow the company organically or via M&As. This could spark another round of M&As in the property sector, involving assets held by its major shareholder, PNB (31% stake). This will boost S P Setia's asset size which has descended to No 2 post the UEM Land Holdings Bhd-Sunrise Bhd merger. However, we believe possible moves within this space at this juncture will be mostly direct land acquisitions.
We are expecting a 36% EPS CAGR between FY11 and FY13, driven by: (i) flagship residential projects, for example, Setia Alam and Setia Eco Park; (ii) RM11 billion worth of commercial project launches at KL Eco City and Setia City; (iii) overseas expansion, to Melbourne, Australia, and Vietnam; and (iv) RM1.8 billion unbilled sales as at Oct'' 2010, or one time our FY11 forecast.
We value S P Setia at RM6.90, based on a 10% premium to our RM6.28 RNAV, for its proven track record and hands-on management. The company traded at a 10% to 20% premium to its RNAV during the previous bull market. At RM6.90, S P Setia will trade at 27 times 2011 price earnings ratio. ' Maybank IB Research, Jan 5
This article appeared in The Edge Financial Daily, January 6, 2011.
No comments:
Post a Comment