SP Setia (Hold)

A second act in Melbourne

'''' SP Setia is acquiring 2.23 acres of vacant freehold land located in the South Yarra suburb of Melbourne, approximately 4km south-east of the Melbourne CBD.

'''' We believe the price of AUD2,796/m² is fair, given that SP Setia paid AUD6,912/m2 for the Fulton Lane development.

'''' Management intends to launch an AUD250m (~RM800m) residential project within 12-18 months.

'''' We are positive on this development, which allows them to capitalise on their success of Fulton Lane, and tap the booming Australian property market, as can be seen in the 58% rise of the Melbourne HPI over the last 5 years.

'''' No changes to our forecasts, as no major impact to earnings is expected until post FY13.

'''' Despite >20% decline in share price during the current sell-down, we see more near-term volatility on share price given its relatively high foreign shareholding amidst flight to the safety of US$.

'''' Maintain HOLD.

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FBM KLCI: Potential relief rally amid oversold positions

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'''' Speculation that European policy makers will announce steps to contain the debt crisis as foreign counterparts lobby for action will likely trigger potential relief rallies this week.

'''' Critical level to watch is the 1311 (23.6% FR). A breach below this level will push index to retest 1300 psychological support. In the wake of extremely oversold positions, potential technical rebound targets are 1386 (lower Bollinger band), 1400 and 1422 (10-d SMA). ''''

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