PublicInvest Research

Author: PublicInvest   |   Latest post: Fri, 13 Dec 2019, 10:07 AM


SP Setia - Secures RM3.07bn in 9MFY19

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SP Setia’s 3QFY19 net profit came in at RM108.9m (+67.1% YoY, -21.5% QOQ) which was partly lifted by foreign exchange gain (FX) from translation of certain Pound Sterling-denominated loan facilities totaling RM37.8m. YTD, Group net profit ex-FX gain is estimated at RM338.3m, below our and consensus estimates at c.66% and c.67% of respective full-year earnings estimates. Sales achieved in 3QFY19 were slightly lower QoQ at RM1.09bn from RM1.26bn in 2QFY19. For 9MFY19, it accumulated RM3.07bn new sales, making up 67% of its FY19 sales target of RM4.55bn. Unbilled sales were down marginally to RM10.52bn, from RM10.67bn a quarter ago. Our FY19-20 earnings estimates are adjusted downwards by -2%/-15% on change of billing and margin assumptions. SP Setia’s stock price continues to weaken on prolonged weak property market outlook and now appears to offer an attractive risk-reward tradeoff at current valuations. Backed by earnings visibility from its healthy unbilled sales and well-diversified 8,984-acre landbank with GDV estimated at RM143.8bn, we believe that there is big value gap and hence upgrade our call on SP Setia to Outperform from Neutral with fair value of RM2.00 (c.60% discount to RNAV).

  • On track to meet its FY19 sales target. YTD, it clinched RM3.07bn new sales with RM2.71bn launched. Local projects contributed RM2.60bn (or 85%), with the remaining from international projects. For local projects, the Central region contributed RM1.75bn while the Southern and Northern regions contributed RM854m combined. As for international projects, UNO Melbourne, Daintree Residence in Singapore and Eco Xuan contributed RM435m in new sales.
  • RM2.17bn remaining to be launched. SP Setia is eyeing another RM2.17bn worth of GDV in the remaining months of FY19. Again, it will continue to focus on the launches of landed properties in the established townships of Klang Valley and Johor Bahru. This will bring the total launches for FY2019 to RM4.88bn. Among the notable launches are new phases in existing townships of Setia Alam, Setia Eco Hill, Setia Eco Templer, Setia Eco Park, Bandar Kinrara, Alam Impian, Setia Eco Garden and Setia Tropika. In addition to that, the Group will also be launching the 2-storey linked houses at Setia Warisan Tropika, the Group’s latest township located in Bandar Baru Salak Tinggi in mid November this year.

Source: PublicInvest Research - 14 Nov 2019

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