SP Setia; Hold; RM3.89
Price Target: RM4.50; SPSB MK

SP Setia (SPSB) announced that its public spread has fallen to below the required 25% minimum level as at yesterday's closing date for acceptance of the mandatory general offer, with PNB and parties acting in concert (including Tan Sri Liew Kee Sin) holding 79% of shares and 88% of warrants.

With PNB intending to maintain the listing status of SPSB, an application will be made to Bursa for a lower public spread or for an extension of time to rectify the issue within 3 months. We believe PNB will likely make a placement to improve SPSB's liquidity (4% stake works out to 75m shares worth RM296m@RM3.95/share).

Maintain Hold and TP of RM4.50, based on 10% discount to RNAV of RM4.97. We still like SPSB for its strong track record (improved clarity on management continuity with Tan Sri Liew remaining fully in control for the next 3 years) and strong growth potential. SPSB is on track to achieve its RM4b FY12 sales target (+21% yoy), with RM932m chalked so far for the first 3 months and a brimming launch pipeline.

SPSB is still looking for more landbank (including government land redevelopment and overseas projects) - leveraging on its strong balance sheet (net cash) and backing from PNB.

Source: HwangDBS Research 20 March 2012