March 23, 2011

SPSETIA - HwangDBS positive on SP Setia

Stock Name: SPSETIA
Company Name: SP SETIA BHD
Research House: HWANGDBS

SP Setia Bhd investors should look forward to its upcoming one-for-two bonus issue, following its 15 per cent placement, said HwangDBS Vickers Research.

"The placement was five times covered at a strike price of RM5.78 following a book-building exercise. This is within the 10 per cent discount from the five-day volume weighted average market price guided earlier," it said in a research note today.

HwangDBS described the bonus issue as positive as it removed share overhang concerns with the placement of 153 million new shares which would raise RM885 million for the group.

It currently stands at a temporary net cash position of RM195 million.

Proceeds of RM762 million or 86 per cent will be used to fund capital expenditure and working capital while the remaining RM113 million would be used for land bank acquisitions.

"Even with three land acquisitions year-to-date, we believe SP Setia still has room for more given a record RM2.2 billion in unbilled sales and a RM3 billion sales target for financial year 2011," it said.

HwangDBS reiterated its "Buy" call on the group with a target price of RM7.90. -- Bernama

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