SP Setia’s corporate exercises may fast track bourse status
KUCHING: Property developer SP Setia Bhd’s (SP Setia) corporate exercises to fund its RM3.65 billion acquisition of I& P Group Sdn Bhd ( I& P Group) may fast track its plans to gain back its FBM KLCI status.
To recap, news of SP Setia’s acquisition of I& P was announced on Bursa Malaysia last week along with news of three corporate exercises the group is intending to take in order to part-fund the a quisition.
In the statement, the group proposed a rights issue of ordinary shares, a rights issue of new Class B Islamic redeemable convertible preference shares, and the placement of new SP Setia shares.
It is understood that each of these proposals is expected to raise RM1.2 billion and from the RM2.4 billion raised from the rights issue of shares, RM2 billion will be used to part-finance the proposed I& P.
The rest will be used for other projects and general working capital.
For the placement of shares, it has been guided that a maximum shares to be placed may be around 355.0 million and based on that estimation, it is expected to boost revised net asset valuation ( RNAV) per share by 2.5 per cent to RM4.59. Due to these corporate exercises, the group is anticipated to widen its market capitalisation at a faster rate which will in turn
These corporate exercises are expected to fast track SP Setia’s plan to be an FBMKLCI member to possibly in 2018, which is faster than our original assumption of 2020.
fast track its goal of entering the FBM KLCI.
“These corporate exercises are expected to fast track SP Setia’s plan to be an FBMKLCI member to possibly in 2018, which is faster than our original assumption of 2020,” said the research arm of MIDF Amanah Investment Bank Bhd ( MIDF Research).
Looking back at the news of I& P’s acquisition, the research arm was highly positive on it as the acquisition would allow the property mogul to boost its total land bank by 83 per cent to a total landbank of 9417 acres.
While the RM3.65 billion price tag placed on I& P Group came within the high end of the previous price guidance of RM3.05 to RM3.65 billion, the research arm still noted that the acquisition was RNAV accretive as the total landbank of I& P Group is estimated to be around RM6.15 billion.
“There is also great synergy for the acquisition as SP Setia already has a development project in the areas owned by I& P,” added the research arm.
With that said, MIDF Research maintained its ‘ buy’ call on the stock with a higher target price of RM4.13 per share.
MIDF Research