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Friday, December 10, 2010

Townships still a growth kicker for SP Setia

While township development will continue to be a major earnings catalyst for SP Setia Bhd, other bonus re-rating catalysts will be the successful launch of its RM6.0 billion KL EcoCity by January or February next year, says OSK Research.

In a research note today, OSK said the launch of Phase One of the six to 10-year development will likely comprise 12 blocks of boutique offices valued at some RM60 million each, which would be sold en bloc.

"As we understand that some small and medium enterprises (SMEs) are keen in acquiring these office blocks, the launch by first quarter of calender year 2011 looks likely to be well-received and will provide the necessary momentum to kick-start the entire development," said the research firm.

It said the next growth kicker will be the continuing progress at the RM5 billion Setia City, an integrated commercial city in the Setia Alam township.

According to OSK, Setia City Mall, with 60 per cent of the retail space now taken up, is expected to be completed by late next year and open by mid 2012 and give the whole commercial city added impetus.

Setia City will also have a medical centre, hotels, transportation hub as well as a convention centre.

Meanwhile, MIDF Research said performance in financial year 2011 is expected to continue to be underpinned by SP Setia's existing projects in the Klang Valley, Johor Bahru and Penang.

In a filing to Bursa Malaysia yesterday, SP Setia reported a higher pre-tax profit of RM330.967 million for the year-ended Oct 31, 2010 from RM231.112 million in 2009.

The profit was achieved over a bigger revenue of RM1.745 billion against RM1.408 billion previously, with income principally derived from its property development activities.

MIDF said it was not expecting an upward revision in its earnings forecast for SP Setia in view of a general slowdown anticipated in the sales of residential units next year.

By Bernama

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