Results

• FY14 core PATAMI of RM405.7m came in above expectations, accounting for 108.9% of our full year forecast. Against consensus, SPSB’s FY14 results came in below expectations, accounting for only 94.5% of its full year earnings projection.

Deviations

• Higher-than- expected revenue contribution from property development and construction segment.

Dividends

• Declared final dividend of 5.7 sen/share (4QFY13: 7 sen/share), bringing FY14 total dividend to 9.7 sen/share. FY14 dividend represents payout and yield of 60.5% and 3.0%, respectively.

Highlights

• SPSB achieved RM922m sales for 4QFY14, taking FY14 sales to RM4.62bn. International sales arrived at RM1.8bn of which majority were contributed by the group’s Battersea Phase 2 (RM1.2bn). As for local sales (RM2.8bn), 74% were from Klang Valley projects and the balance is split between Johor, Penang and eastern region.

• SPSB’s Battersea Phase 3A has carried the momentum from Phase 1 & 2 with YTD take -up of 50% after launc hing in less than a month. As such, the project is expected to contribute significantly to the group’s FY15 sales.

• The group shared its FY15 sales target of RM4.6bn, flattish from FY14 sales as it factors in the potential headwinds going forward. With such challenging environment, SPSB will be focusing its launches in established areas (landbank with ready infrastructure and amenities) and most of the launc hed will be within the mid-range benchmark.

• Unbilled sales currently stood at RM11.1bn (51% international; 49% loc al), represents 3.63x FY13 revenue. This will provide earnings resilience in the face of potential negative headwinds going into 2015.

Risks

• Slowdown in sales;
• Escalation in construction; and
• Raw material costs; delays in launches.

Forecasts

• Forec asts remained unchanged despite the slightly above expectations results as we continued to believe property market to remain weak as it enters into CY15.

Rating

HOLD

Positives

• Strong product concepts and pipeline;consistent dividends.

Negatives

• No longer the most liquid property stock inMalaysia.

Valuation

• Target price remained unchanged at RM3.45 (maintain 35% discount to RNAV), whic h values SPSB at 14.8x FY15E P/E, vs. 18x for IOIPG and UEMS.
• Maintain HOLD.

Source: Hong Leong Investment Bank Research - 17 Dec 2014