Company Name: SP SETIA BHD
Research House: RHB
KUALA LUMPUR: RHB Research said the boost in SP Setia's share price has prompted it to relook at its valuations.
It said on Friday, Jan 14 that instead of using its previous revised net asset value (RNAV) based valuations, it changed its valuation methodology to price-to-earnings.
'From our quantitative analysis, SP Setia's historical forward PE is highly correlated (correlation factor 0.9) to the new property sales.
'Given the high correlation, this suggests that target price based on PE is hence meaningful. Based on SP Setia's sales target of RM3bn for this year, the forecast PE is actually 30x,' it said.
RHB Research said based on a PE of 30x, it raised its indicative to RM8.05 (from RM6.95). Maintain Outperform.