Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 17, RM6.70)
Maintain buy at RM6.70 with unchanged target price of RM6.90: We are positive on the potential 40-acre land in Bangsar under a land swap agreement with the government.
This development could boost our revised net asset value (RNAV)'' per share estimate for S P Setia (SPSB) by 19 sen to RM6.47.
We retain our RM6.28 RNAV estimate and RM6.90 target price (10% premium to RNAV) for now, which have upside potential.
During peak times, S P Setia had traded up to a 20% premium to its RNAV, which implies RM7.54 potential TP based on our existing RNAV estimate.
The Edge weekly reports that six research centres under the Health Ministry's Institute for Medical Research (IMR) will be housed under a new 1National Institute of Health (1NIH) integrated complex in S P Setia's Setia Alam.
The government will swap the IMR's existing 40 acres in Jalan Bangsar for the Setia Alam land and RM600 million to RM700 million construction cost for the new 1NIH complex.
The Bangsar land can be developed by S P Setia and its JV partner into an integrated complex of residential and high-rise office buildings.
Assuming the new 1NIH complex takes up a similar 40 acres in Setia Alam (where land costs RM60 psf) and RM700 million construction cost, we estimate S P Setia's effective cost for the Bangsar land to be RM805 million, or RM460 psf.
This appears fair in view of RM646 to RM1,050 psf recently transacted land prices in that area.
We estimate RM6 billion gross development value (GDV)'' based on: (i) 9.2 million net saleable area (NSA) assuming 7.1 plot ratio and 75% efficiency ratio (same as KL Eco City); and (ii) RM650 psf ASP (average asking price of selected Bangsar properties of RM420 to RM1,150 psf now).
S P Setia is still our top pick. Assuming'' the company takes on 60% stake in the project, 20% pre-tax margin and a 10-year development period, the Bangsar land could boost our RNAV estimate by 19 sen to RM6.47.
We retain our RNAV estimate and TP for now, with re-rating catalysts better than expected sales at KL Eco City, prime land acquisitions, upward revisions of GDV for the RM6 billion KL Eco City and RM5 billion Setia City, and government land development potential.
The new 1NIH building is also expected to enhance demand for the Setia Alam, Setia City and Eco Park projects, as IMR employees relocate to Setia Alam. ' Maybank IB Resarch, Jan 17
This article appeared in The Edge Financial Daily, January 18, 2011.
Company Name: SP SETIA BHD
Research House: MAYBANK
S P Setia Bhd
(Jan 17, RM6.70)
Maintain buy at RM6.70 with unchanged target price of RM6.90: We are positive on the potential 40-acre land in Bangsar under a land swap agreement with the government.
This development could boost our revised net asset value (RNAV)'' per share estimate for S P Setia (SPSB) by 19 sen to RM6.47.
We retain our RM6.28 RNAV estimate and RM6.90 target price (10% premium to RNAV) for now, which have upside potential.
During peak times, S P Setia had traded up to a 20% premium to its RNAV, which implies RM7.54 potential TP based on our existing RNAV estimate.
The Edge weekly reports that six research centres under the Health Ministry's Institute for Medical Research (IMR) will be housed under a new 1National Institute of Health (1NIH) integrated complex in S P Setia's Setia Alam.
The government will swap the IMR's existing 40 acres in Jalan Bangsar for the Setia Alam land and RM600 million to RM700 million construction cost for the new 1NIH complex.
The Bangsar land can be developed by S P Setia and its JV partner into an integrated complex of residential and high-rise office buildings.
Assuming the new 1NIH complex takes up a similar 40 acres in Setia Alam (where land costs RM60 psf) and RM700 million construction cost, we estimate S P Setia's effective cost for the Bangsar land to be RM805 million, or RM460 psf.
This appears fair in view of RM646 to RM1,050 psf recently transacted land prices in that area.
We estimate RM6 billion gross development value (GDV)'' based on: (i) 9.2 million net saleable area (NSA) assuming 7.1 plot ratio and 75% efficiency ratio (same as KL Eco City); and (ii) RM650 psf ASP (average asking price of selected Bangsar properties of RM420 to RM1,150 psf now).
S P Setia is still our top pick. Assuming'' the company takes on 60% stake in the project, 20% pre-tax margin and a 10-year development period, the Bangsar land could boost our RNAV estimate by 19 sen to RM6.47.
We retain our RNAV estimate and TP for now, with re-rating catalysts better than expected sales at KL Eco City, prime land acquisitions, upward revisions of GDV for the RM6 billion KL Eco City and RM5 billion Setia City, and government land development potential.
The new 1NIH building is also expected to enhance demand for the Setia Alam, Setia City and Eco Park projects, as IMR employees relocate to Setia Alam. ' Maybank IB Resarch, Jan 17
This article appeared in The Edge Financial Daily, January 18, 2011.
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