SP Setia ended FY12 by registering RM127.0m in the fourth  quarter (54.0% y-o-y, 26.5% q-o-q), which beat both our and consensus expectations. YTD, the Group „s net profit rose to a record high of RM393.8m(20.1% y-o-y) driven by projects in the Klang Valley (i.e. flagship townships such as Setia Alam and Setia Eco-Park, high-rises i.e. Setia Sky Residences and Setia Walk) and landed projects in Johor (Bukit Indah, Setia Indah, etc). Margins again, improved on better cost control and higher selling prices. Dividends of 9 sen were declared, bringing total dividends to 14sen, as expected.     

Raising the bar to RM5.5bn.   SP Setia surpassed its sales target by netting RM4.2bn in FY12, underpinned by stellar performance from Johor and international projects. The central region i.e. the Klang Valley managed to maintain RM1.8bn (+2.5% y-o-y) in new sales while Johor and international sales rose 41.9% and 213.3% respectively. Unbilled sales were c.RM4.4bn. We understand that the Group‟s effective remaining GDV is c.RM70bn and looking at unveiling  Setia Ecohill (673 acres, RM4.0bn) in Semenyih, condominium projects in Penang (c.RM1bn GDV), Pargue Melbourne (RM800m GDV), Eco Sanctuary Singapore (RM1.1bn GDV) and the much anticipated phase 1 of Battersea Power Station in the UK. All told, we believe the Group‟s broad base of exposure both in product mix and location would help in terms of flexibility of meeting market demand. We adjusted our FY13- 14F earnings estimates upwards by +2% and +6% respectively to reflect the better than expected margins.          

Maintain Buy. We maintain our Outperform Call and  RM4.40 TP (c.10% discount to RNAV of RM4.87). We still favor SP Setia for its sizable and welllocated landbank, consistent performance and good earnings visibility.

Source: PublicInvest Research - 13 Dec 2012