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Wednesday, November 10, 2010

SP Setia beats sales target

PETALING JAYA: Leading property developer SP Setia Bhd has exceeded its sales target for the financial year ending Nov 30, 2010 (FY2010), achieving RM2.1bil in the first 11 months.

President and chief executive officer Tan Sri Liew Kee Sin said the property market had remained strong for most of the year.

“Many property developers,including SP Setia had recorded good sales,” he told StarBiz. Liew said the Government’s pump-priming activities and the anticipated Economic Transformation Programme augured well for the propertysector.

“We are definitely looking at doing better in the coming year as we plan to launch our Kuala Lumpur Eco City (KLEC) project in Abdullah Hukum,” he said.

Liew said the company had been actively marketing KLEC and the response had been very encouraging.

“We have received strong registered interest for our strata offices, en-bloc offices and serviced apartments,” he noted

On SP Setia’s properties showcased at the Star Property Fair, Liew said the company would be mainly showcasing its properties in the Klang Valley, which are Setia Sky Residences, Setia Eco Park, Setia Alam and SetiaWalk.

On the company’s marketing and promotional exercise, Liew said marketing and promotional activities had always been on-going.

“Brand building is important to us and we are constantly on our feet where this is concerned. Currently, our Invest in Setiahomes scheme is continuing until year-end,” he said.

He said the Setiahomes scheme involved a 5% down payment and up to 95% loan margin, depending on the banks.

Moreover, legal fees and stamp duty on sale and purchase agreement and loan documents would be absorbed by SP Setia.

“The interest during construction period up to vacant possession would also be absorbed by us,” he said.

AmResearch in a report on Oct 22, had maintain a “buy” rating on SP Setia and had raised its fair value from RM4.84 per share to RM6.50 per share pegged to a 5% discount to its upward revised net asset value (NAV) of RM6.82 per share.

The report had lifted SP Setia’s NAV from RM4.61 per share to RM6.82 per share to reflect more aggressive pricing and demand assumptions for KL Eco City, as it turns bullish on this massive RM6bil development following a company visit.

It said: “We have raised our earnings estimates 17% to RM233mil for FY10F, 14% to RM265mil for FY11F, and 15% to RM313mil for FY12F.

This put SP Setia three-year earnings per share compounded annual growth rate at 23% (compared with 1% for FY08-FY10), it said.

“In our opinion, the market may have underappreciated the deeply embedded value of Eco City, given the current bearish consensus view on condominium and office space due to oversupply concerns,” said in the report.

The report also said KL Eco City would be a testament to SP Setia’s slick execution and uncanny ability to strike deals.

“Given SP Setia’s design niche, first mover advantages and market reach, Eco City may usher in a new era for SP Setia propelling its annual pre-sales to a record high of RM3bil starting from FY11F (FY10F: RM2bil),” it noted.

A local analyst said SP Setia had a net gearing of only 0.29 times and can comfortably raise gearing to 0.5 times or a maximum of 0.75 times.

“The current low gearing of SP Setia allows the property developer to borrow up to RM1bil for landbanking purposes,” he said.

The analyst said it was very likely that SP Setia would be participating in land privatisations by the Government.

He said SP Setia was trading at a 25% discount to the fully diluted net asset value of RM6.80 – which is unjustified given its solid track record and also one of the most liquid property stocks in the market.

By The Star

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