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S P Setia in a good position to beat its RM3.8bil sales target for FY21

S P Setia Bhd may likely exceed its own sales target of RM3.8 billion for the financial year ending December 31, 2021 (FY21), given that it recorded stronger earnings in the first quarter of the year.

Maybank Investment Bank Research (Maybank IB) said judging from the strong sales momentum in the first quarter, S P Setia stands a good chance to beat its official sales target of RM3.8 billion for FY21 (FY20: RM3.8 billion).

“However, it is keeping its FY21 sales target, for now, supported by RM3.7 billion worth of new launches,” it said in its report yesterday following a recent conference call with the developer.

It had been reported that some 54 per cent of the total new launches will be development projects with properties selling below RM1 million each, with the rest comprising properties priced above RM1 million each.

From the total GDV of RM3.7 billion, about 67 per cent will be landed residential units, followed by condominiums and apartments (14 per cent), commercial units (nine per cent), serviced apartments (four per cent), affordable housing (four per cent), and industrial units (two per cent).

Notable launches will be in Setia Alam, Setia Eco Hill 1&2, Setia Alamsari, Bandar Kinrara, Temasya Glenmarie, Taman Pelangi, Setia Tropika, and Setia Fontaines.

Maybank IB said that S P Setia had been carefully launching new units and so far, only new phases at existing township projects have been launched.

The investment bank maintained its “buy” call on S P Setia shares, with an unchanged target price of RM1.39.

The target price was based on 0.4x the estimated FY21 price-to-book value (PBV) of S P Setia, it said.

“S P Setia is reviewing its capital structure to leverage on the current low-interest rate environment. It is also looking to dispose of 1,295 acres of non-core landbank worth RM2 billion in market value,” the firm said.

Maybank IB also revealed that S P Setia had expressed its intention to resume dividend payment and reward its ordinary shareholders this year.

The developer expects to resume its dividend payment post the completion of its Battersea Power Station (BPS) Phase 2 and 3A projects in London.

BPS Phase 2 is expected to be completed by August, while Phase 3A is expected to be completed between November this year and March 2022.

According to the report, BPS Phase 2 and Phase 3A were nearing completion thus there was no urgent need for immediate funds for future developments at the Battersea project.

“S P Setia halted dividend payment in FY20 after reporting a net loss of RM321 million, caused mainly by impairments. The assessment on its unsold stocks’ saleability was made in the worst-case scenario last year and hence, management does not expect further impairments in the coming quarters,” Maybank IB said.

Source: NST