KUCHING: SP Setia Bhd’s (SP Setia) near term earnings could potentially benefit from the appreciation of the pound sterling.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) yesterday said the property developer is poised to gain from the increase in the exchange rate of the pound against the ringgit due to the property developer’s high exposure to the London property market via the Battersea Power Station.
The research firm noted new property sales from the Battersea project in seven months of financial year 2015 (7MFY15) ended May 2015 were RM845 million which made up 43 per cent of the group’s total new sales of RM1.97 billion.
MIDF Research also noted SP Setia’s unbilled property sales from BPS project stood at RM3.62 billion or 33 per cent of the group’s total unbilled sales of RM11 billion.
Following a recent corporate briefing, the research firm said SP Setia has maintained the property sales target of RM4 billion for financial year 2015 (FY15) from RM5 billion worth of property launches.
MIDF Research opined the property developer is on track to achieve its sales target due to the company’s focus on launching mid-range projects and landed properties.
Additionally, the research firm expects the property developer to post improved financial performance for third quarter financial year 2015 (3QFY15) attributed to more property sales recognition from the Australian project.
In 2QFY15, MIDF Research noted SP Setia has started to recognise revenue of RM370 million from Fulton Lane Tower 1 project in Melbourne, Australia.
Thus, the company could recognise the remaining RM1.06 billion revenue in 3QFY15 due in September as the research firm observed that the handover of Fulton Lane Tower 2 is almost completed.
MIDF Research estimated SP Setia’s nine months financial year 2015 (9MFY15) forecast core net profit to surpass RM500 million which makes up 83 per cent of consensus forecast.
The research firm remains upbeat about the company’s earnings prospects due to favourable GBP rate against the ringgit, potentially better financial performance in upcoming 3QFY15 results and strong unbilled sales with earnings visibility of approximately three years, the longest among its peers.