SP Setia on track to achieving RM4 billion sales target

KUCHING: SP Setia Bhd (SP Setia) is on track to achieving a RM4 billion sales target as it has secured RM2.82 billion sales in the first nine months of the financial year 2017 (9MFY17), analysts say.

MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) in report, noted that SP Setia’s 9MFY17 sales makes up 71 per cent of management and its full year target of RM4 billion.

“Local projects contributed RM1.66 billion or 59 per cent of the total sales with the remaining from international project. Unbilled sales of RM7.05 billion provide earnings visibility for 1.4 years,” it said.

Meanwhile, it noted that SP Setia’s I&P acquisition and corporate exercises are expected to be completed by the end of FY17.

“We reiterate our view that the I&P acquisition is revised net asset value (RNAV) accretive as we estimate that the market value of its landbank is RM6.15 billion (against its purchase price of RM3.65 billion). Hence, we believe that the corporate exercise which is expected to raise a total RM3.6 billion should be viewed positively by the market,” it opined.

It noted that SP Setia has proposed rights issue, rights issue of new class B Islamic Redeemable Convertible Preference Shares, and private placement.

“After the completion of I&P acquisition and corporate exercises, SP Setia market cap should be boosted to between RM14 billion to RM15 billion which we think is the right size to join FBM KLCI (assume improving share liquidity from the private placement and higher market cap),” it said.

All in, MIDF Research maintained a ‘buy’ call on the stock.

It added, “We continue to like SP Setia as we expect the company to join FBM KLCI next year (a catalyst for valuation rerating) and its good dividend yield of 5.6 per cent.”

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