SP Setia's share price is set to surpass OSK Research's current target price of RM6.58 and test its post-Asian crisis high, it said today.

In a previous report, the research house said there will be a coming super cycle with 1970s subtle baby boomers quest to buy trade-up homes, coinciding with the 1950s baby boomers eager search for real estate investment opportunities.

'Fuelled by the twin demand from these two groups of baby boomers, the upcoming boom in mid to high-end residential properties, particularly landed ones, promises to be more than just an ordinary upcycle,' it said.

It said banks have been eager to fund and fuel the boom by encouraging the society and the financial system to leverage further and switch from traditional financing to more speculative financing.

'This has in turn created a sense of euphoria, which is fuelling the country's biggest residential real estate boom since the Asian financial crisis between 2009/2010 and 2012/2013,' it said.

OSK Research had also revised its target price of RM6.58 to RM7.23 on the premise of an impending boom bigger than the 2007 upcycle, and has maintained its 'Buy' call on the company.

Meanwhile, it said there may be inflows of foreign hot money to ride on the super cycle.

'While the stock's current valuation is nearing our target and is about to test the post-Asian crisis high of 3.1 times Price/Net Tangible Assets.

'Its latest foreign shareholding is a mere 25 per cent, which is a far cry from more than 40 per cent during the 2007 boom.

'Hence, there is a high possibility that the next wave of foreign hot money pouring into Malaysia to ride on the residential property 'super cycle' may shove SP Setia's valuation to surpass even the peak level it attained in 2007,' it added. -- Bernama