Maintain BUY. SPSB’s upcoming FY10/12 results are likely to come in within our and consensus estimates.  4Q is likely to be stronger QoQ and YoY supported by record  sales of MYR3.3b achieved in FY10/11 and MYR3.64b in  11MFY10/12. We maintain our earnings forecasts and MYR3.81 RNAV-based TP (MYR3.60 post placement) for now. We continue to like SPSB for its market leadership, strong track record and strategic landbank, which underpins long-term growth potential.

Decent earnings growth. SPSB will announce its FY10/12 results on 12 December. We expect 4Q net profit of MYR101-108m (+1-8% QoQ, +23-31% YoY), taking FY10/12  core earnings to MYR368-375m (+25- 27% YoY). Earnings will likely be driven by strong unbilled sales mainly from its township projects in Johor and Setia Alam. We expect SPSB to declare a final gross DPS of 8.6sen, lifting full-year DPS to 13.6sen.  

Record sales. SPSB had locked in MYR3.64b in sales by 11MFY10/12, on track to  meet its  FY10/12  sales target of MYR4b.  Key sales contributors include KL Eco City, Setia Alam and Fulton Lane. 4Q sales should be boosted by strong take-ups at newly-launched Setia Sky 88 in Johor and Eco Glades in Cyberjaya.  Unbilled sales of MYR3.8b at end-Jul 2012 were healthy, at 1.2x our FY10/13 revenue forecast.  

Scaling  greater  heights.  Management has not revealed its sales target for FY10/13 but  it  could  reach  another record with the  official launches of Battersea Power Station phase 1 (BPSP1; MYR5b in GDV) in Apr 2013, Eco Sanctuary in Singapore (MYR1.1b in GDV) and Setia Eco Hills in Semenyih/Kajang (MYR4b) in FY10/13. Response for  the 800 apartments  to be built in  BPSP1 (ASP:  GBP900psf)  has been strong with more than  5,000 registrants, we understand. Meanwhile, Setia Eco Hill recently launched bungalow land plots at c.MYR100 psf.

Fundamentals remain sound. SPSB  currently trades at  a  forward PER/PBV of 14x/1.7x, below  the  respective  historical means of 16x/1.8x.  Whilst its proposed  placement of 322.6m new shares will dilute our FY10-13/14 EPS  estimates  by 12%/13% (implied PER/PBV of 16x/1.6x), its balance sheet will strengthen significantly, giving it the wherewithal for long-term execution and  to take advantage of landbanking opportunities.

Source: Maybank Research - 11 Dec 2012