SP Setia’s (SPSB) 1QFY23 net profit came in at RM55.4m (-17.8% YoY, -21.0% QoQ), constituted only about 17% of our and consensus full-year estimates. We deem it as in line however as the first quarter is seasonally weak and overseas contribution especially from UNO Melbourne is expected to kick in by 3QFY23. Positively, we note that the Group managed to clinch c.RM1.03bn of pre-sales in 1QFY23 (or +52YoY from RM679m a year ago), or about 24.5% of its FY23 sales target of RM4.2bn. Unbilled sales as at 1QFY23 stood at RM7.17bn, down slightly from 4QFY22 (RM7.3bn). The Group has RM6.17bn worth of projects to be unveiled in FY23 and it has launched about RM683m in 1QFY23. Net gearing is now at about 0.56x, and the Group aims to lower it to 0.5x by end-FY23, which among others will be supported by sale of non-core assets such as land and investment properties (with estimated total value of RM5bn). Maintain Outperform and TP of RM0.95 pegged at c.60% discount to book value.
- 1QFY23 property revenue rose 9% YoY to RM895.8m, mainly driven by higher sales achieved and contributions from its projects in Australia, Central region and land sales in Selangor. Correspondingly, Group property development pretax profit (PBT) also rose by 7.5% to RM130.4m. We understand that SPSB has a remaining RM1.3bn to be recognized in the coming quarters from overseas projects. During the quarter, it achieved RM1.03bn in pre-sales with local projects contributing RM903.0 million or c.87% while the international projects contributed RM130m or c.13%.
- RM6.17bn worth of launches in FY23. We understand that most of the launches will be concentrated in the Central region with a Gross Development Value (GDV) of RM3.83bn, which among others include the Group’s flagship developments such as Bandar Setia Alam, Setia Ecohill 1 & 2, Setia Eco Templer, Bandar Kinrara and Setia Eco Park as well as rebranded projects of Setia Alamsari (North and South), Setia Alam Impian and Setia Bayuemas. The Group had launched a total GDV of RM683m in 1QFY23 which we understand has seen encouraging sales. Elsewhere, it offloaded completed inventories worth of RM107m during the quarter. As at 31 March 2023, it secured total bookings of RM512m.
Source: PublicInvest Research - 18 May 2023