Stock Name: SPSETIA
Company Name: SP SETIA BHD
Company Name: SP SETIA BHD
| Research House: OSK | Price Call: HOLD | Target Price: 4.34 |
SP Setia's 1QFY12 net profit made up only 21.4% of both our and consensus' FY12 forecasts, which we deem in lineafter taking into account seasonal factors in 1QFY12. Y-o-y revenue nudged down 5.3%, while PBT jumped 19.3% on improved margins. We maintain our forecasts and Neutral call on SPSetia, with an unchanged FV of RM4.34, based on 2.3x FY12 P/NTA, which isequivalent to its 5-year historical average P/NTA.
Largely within.SP Setia reported a net profit of RM74m for 1QFY12, which made up only about21.4% of both our and consensus full-year forecasts. We view the results as withinour expectations in view of the seasonal effect arising from the major festive holidays in 1QFY12. However, the year-end holidaysand Chinese New Year celebrations led to slower progress billings as constructionactivities slowed down during that period. Revenue for 1QFY12 was down by 22.4%q-o-q and 5.3% y-o-y as the Chinese New Year was celebrated earlier in the month of January this year versus Februaryin the previous year. Despite the lower revenue y-o-y, net profit jumped 19.3% dueto improved margins, mainly attributed to the higher selling prices for itsproperties. The ongoing projects which contributed to the company's bottom- andtop-lines included Setia Alam and Setia Eco-Park, Setia Walk, Setia SkyResidences, Bukit Indah, Setia Indah, Setia Tropika and Setia Eco Gardens in Johor Bahru and Setia PearlIsland, Setia Vista and Setia Greens in Penang.
RM1.23bn in newsales. SP Setia has set a sales target of RM4bn for FY12 and as at end-Feb2012, it had achieved about RM1.23bn worth of new sales. The strong sales performancein FY12 was achieved through a combination of sustained sales contribution fromits established projects in the Klang Valley, Johor Bahru and Penang, as wellas sales from KL Eco City and Fulton Lane in Melbourne, which were launched towardsthe end of FY11. As its maiden foray into East Malaysia via Aeropod in Sabah alsoregistered a strong take-up, the group's sales performance in FY12 is expectedto strengthen further.
Maintain Neutral.We maintain our forecasts and Neutral recommendation on SP Setia, with anunchanged FV of RM4.34, based on 2.3x FY12 P/NTA, which is equivalent to its 5-yearhistorical average P/NTA. At the closing date of the GO, the joint offerors(PNB and Tan Sri Liew) held acombined 78.95% stake in SP Setia, which gave rise to a shortfall in the 25% public shareholding requirement. As the joint offerors intend to maintain SP Setia's listing, they are currently studying various options to address this shortfall.
Source: OSK188
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