S P Setia Bhd
Buy. Target price:
SP SETIA is in the midst of getting approvals to rezone Setia Alaman Industrial Park (GDV: RM3.09 billion) for industrial use. The industrial park spans 399 acres, comprising of 35 plots of industrial land and six plots of commercial land. Some land parcels were recently transacted by logistics players at RM140160 psf, well exceeding management’s initial expectations. The attractive price is largely attributed to its strategic location and connectivity, linked to major highways like Jalan Meru and the North Klang Valley Expressway or NKVE. Other than the outright sale of industrial plots, SP Setia is also planning a JV for the codevelopment of certain plots.
In the coming years, SP Setia is also planning to launch industrial developments in Tanjung Kupang, Johor (GDV: RM1.87 billion) and Setia Fontaines, Penang (GDV: 1.68 billion). 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 of land 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.
SP 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). We think this would be a positive as it would lighten its balance sheet further.
Maintain BUY, with new RM1.56 TP from RM1.24, 17% upside.