I&P deal to lift SP Setia earnings, market cap
KUALA LUMPUR: SP Setia Bhd’s earnings and market capitalisation are set to get further boost after the completion of I&P Group acquisition by year-end.
At its current market capitalisation of RM10.36 billion, chances of SP Setia overtaking IOI Properties Group Bhd as the largest property developer in Malaysia seems very possible.
SP Setia president and chief executive officer Datuk CJ Khor said the company expected to complete the due diligence process for the acquisition by next month and conclude it by yearend.
SP Setia aims to reach RM18 billion market capitalisation in the future.
Khor expected earnings to pick up in the remaining quarters of this year as the company was on track to achieve its RM4 billion sales target on strong launches.
He said this would be driven by higher revenue contribution from overseas projects.
Assuming the completion of the acquisition by year-end, MIDF Research analyst Alan Lim said SP Setia’s earnings should increase further and lead to higher market capitalisation.
The research house analyst had forecast higher revenue growth of 22 per cent for SP Setia this year without taking into account the I&P Group acquisition.
“SP Setia could gain the FTSE Bursa Malaysia KLCI status sooner than 2020 if it continues to replenish its landbank size and consistently achieves higher sales exceeding RM4 billion,” he said.
In its last report on SP Setia, Lim said the property developer, which was currently the second biggest listed property developer by market capitalisation after IOI Properties Group Bhd, was poised to be among the top 30 biggest public companies in Malaysia by 2020.
Market capitalisation for IOI Properties’ currently stands at RM11.5 billion.
Launches this year are expected to command a gross development value (GDV) of more than RM5 billion, the biggest of which will be located at Exhibition Street in Melbourne, Australia, with a GDV of A$478 million (or RM1.54 billion).
SP Setia has unbilled sales of RM7.84 billion, which is expected to provide earnings visibility for 1.6 years.
The property developer’s other overseas projects include Eco Sanctuary in Singapore and Battersea Power Station in London. Amir Hisyam Rasid
The Battersea Power Station development in London is one of SP Setia’s overseas project.