Two research houses maintain ‘buy’ calls on SP Setia

KUALA LUMPUR: RHB Research has maintained a ‘’buy’’ rating on SP Setia Bhd with a target price of RM4.38 a share, following an announcement of its acquisition cost for the I&P Group and a fund-raising exercise that includes a rights issue to raise RM1-1.2 billion.

In a research note yesterday, RHB said, it was positive on the exercise, as valuations for I&P were attractive, and SP Setia would become one of the largest developers in Malaysia.

“We think the fund-raising exercise is necessary for SP Setia to have a quantum leap in terms of market capitalisation (market cap), landbank, and property sales.

“SP Setia, upon the acquisition, will emerge as top three largest land owners in Malaysia, with RM13-14 billion potential market cap and with property sales of about RM5 billion, possibly be the highest among all listed developers,” it said.

The research house said the large size was also important for the company to bid for big-scale projects, particularly in international space.

Meanwhile, Hong Leong Investment Bank (HLIB) has also maintained a ‘’buy’’ call on SP Setia with target price of RM4.00 a share.

It said the deal would also double SP Setia’s existing landbank to 3844.514 hectares, making it the third largest land owner in Malaysia, it said. — Bernama