S P Setia’s outlook robust on new property sales

PETALING JAYA: S P Setia Bhd’s prospects remain solid, backed by new property sales and the company’s de-gearing plans, which are on track.

RHB Research reaffirmed its positive view on the property developer following a recent meeting with the management.

It noted S P Setia’s sizeable landbank portfolio would provide good flexibility for the company to be nimble to changes in market conditions, and roll out more industrial park developments.

“S P Setia is in the midst of getting approvals to rezone Setia Alaman Industrial Park (gross development value or GDV of Rm3.09bil) for industrial use. The industrial park spans 399 acres, comprising 35 plots of industrial land and six plots of commercial land.

“Some land parcels were recently transacted by logistics players at RM140 to RM160 per sq ft, well exceeding management’s initial expectations,” the research house said in a report yesterday.

RHB Research said the attractive price is attributed to its strategic location and connectivity, linked to major highways like Jalan Meru and the North Klang Valley Expressway.

Moreover, S P Setia is also planning a joint venture (JV) for the co-development of certain plots apart from the outright sale of industrial plots. The group is planning to launch industrial developments in Tanjung Kupang, Johor (GDV: Rm1.87bil) and Setia Fontaines, Penang (GDV: Rm1.68bil).

“For Tanjung Kupang, management is currently in advanced negotiations for a 50:50 JV with another reputable industrial park developer.

“For Setia Fontaines, the company is in the process of converting 323 acres for industrial use and is working on another potential JV to develop the area.

“This will be adjacent to its existing 801 acres of residential and commercial land, but this project is only slated for launch in 2026,” RHB Research said.

According to the research firm, S P Setia’s de-gearing plans are on track and the group’s gearing is expected to stabilise at the current level, looking at the potential proceeds from land disposals and upcoming cash commitment for developments.

“We expect Rm130mil to Rm140mil gain on land disposals to be recorded this year, mostly from Bandar Setia Alam and Glengowrie, Semenyih.

“Management shared that the 960-acre Tebrau land has received new suitors at a slightly higher price after the sale and purchase agreement to Scientex Lestari (for Rm547.7mil) was terminated earlier this year,” RHB Research said.

S P Setia is in the preliminary stage of listing some of its investment properties and has identified a diverse list of potential assets in various sub-sectors, such as Setia City Mall (retail), KL Eco City (office) and Tenby Setia Eco Park (education).