SP Setia has been given notice of the resignations of Tan Sri Liew Kee Sin, Dato’ Teow Leong Seng and Tan Sri Lee Lam Thye  –  this has  been widely  expected.  While  Dato’  Voon  Tin  Yow  will  assume  the  acting president and CEO role for one year, we believe major shareholder PNB will  play  a  crucial  role  in  appointing  the  successor  to  drive  the  longterm growth of the company. Maintain NEUTRAL.

• The  CEO  has  officially  resigned.  Tan  Sri  Liew  (group  president  and CEO)  will  leave  SP  Setia  on  30  April.  Dato’  Teow  (CFO),  who  was originally assigned  to take  over as deputy president, will stay on until 31 July,  while  Tan  Sri  Lee  has  resigned  with  immediate  effect  as  a  nonindependent and non-executive director.
• Joining EcoWorld?  In the  press release, Tan Sri Liew indicated that he would like to spend more time in guiding and mentoring his children in their  career  paths.  However,  we,  and  the  market  expect  him  to  join EcoWorld  (ECW  MK,  NR).  Eco  World  Development  Holdings  SB  and Liew Tian Xiong (Tan Sri Liew’s son) collectively acquired a 65% stake in the  company  in  Sept  2013.  Note  that  Tan  Sri  Lee  was  appointed independent  and  non-executive  director  of  EcoWorld  in  Nov  2013.  We believe  the  business  strategy,  land  injection  and  corporate  exercise plans will be announced when Tan Sri Liew comes on board.
• All  eyes  on  Permodalan  Nasional  (PNB).  Following  the  departure  of Tan  Sri  Liew,  as  announced  earlier,  current  COO  Dato’  Voon  will assume the role of  acting President and CEO for one year from 1  May 2014 until 30  April  2015.  He will be supported by  Dato’ Khor Chap Jen (executive vice-president currently) as his acting deputy president for the same  period.  As  a  major  shareholder,  we  believe  PNB  now  plays  an important role  in  appointing  the new successor  who  has the capability to drive the long-term growth and strategy  of SP Setia. M&As  could be a catalyst  for  the  stock,  as  PNB  may  take  the  opportunity  to  merge  its property assets into one single entity.
• Maintain  NEUTRAL.  While  its  landbank  is  strategic  and  there  is attractive value in the stock, we reiterate our view that  leadership  is an important  element  to  unlock  the  value  of  SP  Setia’s  assets.  Also,  the timing  of PNB’s  plans, if any,  are  still unknown.  Therefore, we  maintain our  NEUTRAL  rating  on  the  stock.  FV  is  kept  at  MYR3.54,  based  on 20% discount to RNAV.

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Company Profile
SP Setia has been the sector bellwether over the years. The company has anchor presence in many key areas in Malaysia and ,  last year, ventured into London together with the Employees Provident Fund (EPF) and Sime Darby for a MYR40bn project.

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Source: RHB