SP Setia (BUY)

SP Setia: Acquires new landbank in Penang

• SP Setia is acquiring 21.3 acres of freehold land in Penang Island for RM185.6m, or RM200 psf. 
• The land is located near the Batu Ferringhi stretch and SP Setia plans to developed houses similar to Eco-themed houses and apartments with RM1.1bn GDV.
• We view the acquisition price of RM200 psf as reasonable, given that it is slightly lower what they paid for Brook Residences (RM250 psf) and Setia V Residences (RM238).
• Pending further clarity on project margins and timing, we maintain our forecasts and target price at RM4.39 (10% discount to RNAV).

Source: Hong Leong Investment Bank Research - 16 May 2012