SP Setia (SPSB)’s 4QFY23 net profit came in stronger than expected driven by high billings due to handover of few projects during the quarter. Group net profit of RM298.6m (-1.9% YoY) in FY23 surpassed both our and consensus full year estimates. Separately, net gearing improved further to 0.49x, from 0.56x in 1QFY23 which also came in better that its target of 0.5x by end-FY23. The Group also surpassed its FY23 sales target by 21%, after securing total pre-sales of RM5.1bn in FY23 driven by strong demand for its launches and land monetisation. Separately, dividend of 1.34 sen per share was declared. NO change to our earnings estimates. The stock price has softened since the announcement of the cancellation of the proposed land disposal to the Scientex JV and we believe riskreward is attractive now and hence we upgrade our call to Outperform call with TP unchanged at RM1.00 pegged at ~65% discount to its book value (vis-à-vis sector average of ~0.4x to book value). We like the stock for its undemanding valuations and well-located landbank
Source: PublicInvest Research - 1 Mar 2024
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