SP Setia (SPSB) registered 3QFY24 headline net profit of RM100.0m (+77.3% YoY, 29.3% QoQ), mainly due to billings from property development and supported by strategic land monetization that was completed during the quarter. In 9MFY24, Group net profit of RM472.4m (>100% YoY) was within our and consensus expectations, at about 82% of respective full year estimates. Again, profits during the quarter were boosted by land sales amounting to RM143m though mitigated by lower contributions from Australia and higher share of losses from Battersea Power Station. With land sale gains at its tail end, we expect Group earnings to normalise in the coming quarters. Elsewhere, SPSB achieved presales of RM3.2bn in 9MFY24, on track to meet its FY24 sales target of RM4.4bn. Unbilled sales now stands at RM3.5bn, down from RM4.2bn in 2QFY24. No change to our earnings estimates as we maintain our Neutral call with TP unchanged at RM1.30, pegged at ~50% discount to its book value (or 16x of its FY25 EPS).

• 9MFY24 revenue from property development segment rose 46% YoY to RM4.03bn, while pre-tax profit almost doubled YoY to RM799.8m, driven mainly from unlocking value from strategic land deals and higher revenue from the Central & Southern regions. Group net gearing ratio continues to strengthen over the past few quarters to 0.35x in 3QFY24, compared to 0.41x in the preceding quarter. Revenue visibility is also still healthy with RM3.5bn of unbilled sales as at 3QFY24.
• On track to meet FY24 sales target of RM4.4bn. We understand that the Group has plans to unveil RM1.97bn worth of projects in the remaining months of FY24. As for overseas projects, it has successfully undertaken the global launch of ATLAS Melbourne (RM2.7bn in GDV) with 251 units taken up so far. While in the Central region, it is gearing up to unveil a new Setia landmark in Kuala Lumpur: Setia Federal Hill (Jalan Bangsar) Phase 1 with exclusive preview already held on 23rd and 24th November. YTD, SPSB has achieved robust total sales of RM3.2bn. Local projects again dominated, contributing RM3bn, with a substantial 94% of the Group's sales driven primarily by the Southern and Central regions, bringing in RM1.58bn and RM1.37bn, respectively to the Group.

Source: PublicInvest Research - 26 Nov 2024