S P Setia expects sales to pick up strongly in 4Q

Group confident of hitting 2022 target

“It expects sales to pick up significantly in the second half, with more new launches and the completion of Battersea Power Station in London, England and Melbourne projects.” Maybank Investment Bank Research

KUALA LUMPUR: S P Setia Bhd’s earnings should pick up strongly in the fourth quarter of 2022 (4Q22) with the handover of its Melbourne, Australia project – Sapphire by the Gardens (SBTG) dual tower development, according to Maybank Investment Bank (IB) Research.

The property developer is also confident about hitting its 2022 sales target of Rm4bil.

“It expects sales to pick up significantly in the second half, with more new launches and the completion of Battersea Power Station in London, England and Melbourne projects,” said the research unit in a report.

Maybank IB Research noted that S P Setia has locked in property sales of Rm1.67bil in the first half (58% in the Klang Valley; 83% of local sales) or 41% of its 2022 sales target.

As at June 2022, S P Setia has Rm559mil worth of bookings.

Unbilled sales stood at Rm8.7bil (1.6 times Maybank IB Research’s estimated 2023 revenue) as at end-june 2022.

Meanwhile, the group’s net gearing remained high at 0.64 times as at end-2q22.

Maybank IB Research said to lower its debt level, S P Setia is looking at several measures including monetising its landbank and bringing in strategic joint-venture partners for some of its projects to lower upfront development costs.

“Cashflow repatriation from its overseas projects will also help to bring down its debt level,” said the research unit.

It maintained its “hold” call for S P Setia’s stock but at a slightly higher 73 sen target price (from 72 sen previously) based on its estimated 0.2 times 2023 price-to-book value.