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Wednesday, March 19, 2008

SP Setia expects to meet original sales target

PETALING JAYA: SP Setia Bhd is confident of achieving its original sales target of RM1.8bil for the year ending Oct 31 after it gets a clearer picture of the stance of the new state administrations in Selangor and Penang towards business.

In a statement made available to StarBiz, group chief executive officer Tan Sri Liew Kee Sin said the property developer “should not face any problems adjusting to the new administration, which stated their commitment to uphold good governance, transparency and equal opportunity”.

The statement came on the heels of a downward revision by SP Setia last week of its sales target to RM1.5bil from RM1.8bil due to worries over administrative uncertainties after the opposition took control of Selangor and Penang, where most of the group's projects are located.

Liew said the revision of the group's sales target last week was made on the assumption of a worst-case scenario in the event of a one- to two-month delay in the establishment of local councils.

“Such a delay could result in a timing difference in sales being made in FY09 instead of FY08,” he said in the statement.

Knowing the authorities' commitment to a pro-business policy, Liew said the concerns could be excessive.

“We are pleasantly surprised at the speed with which the newly established Penang and Selangor governments have gotten down to business,” he added.

SP Setia's share price rebounded sharply in the final trading hour yesterday. The stock put on 18 sen, or 5.2%, to RM3.62 after sliding to a 14-month low of RM3.12.

The property group's shares succumbed to heavy selling last week after the group cut its sales target. The drastic fall in share price from the RM5 level wiped out roughly RM1.5bil of its market capitalisation in the past one week.

The cautious macro-economic outlook due to the subprime loan crisis in the United States also weighed on the property stock.

Citi Investment Research, which has downgraded SP Setia shares to a “sell'', cited concerns over the macro economy and higher inflation risks this year, which could reduce consumers' disposable income.

“We expect private consumption (growth) to slow to 8% this year from 11.7% last year. As a result, potential buyers, especially in the mass market segment, could adopt a wait-and-see attitude,” Citi said in a research note on Monday.

Liew, however, believes that the outlook for the property sector is “positive”, adding that consumer sentiment remained “supportive of property purchases''.

He said SP Setia had recorded sales revenue of RM646mil for the first four months in FY08 compared with RM290mil in the previous corresponding period.

By The Star (by Kathy Fong)

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