SP Setia’s FY24 earnings could double with Johor land sale

KUCHING: Developer SP Setia Bhd’s (SP Setia) financial year 2024 (FY24) earnings could potentially more than double with the upcoming disposal of its 960-acre land parcel in Johor.

In a company report, the research arm of Maybank Investment Bank Bhd (Maybank Research) guided that SP Setia is currently in the advance stages of negotiation for the sale of its 960-acre land in Johor and could possibly seal the deal as early as the second quarter of 2024 (2Q24).

They highlight that due to the recent rising demand for Johor properties, the selling price of the land could likely exceed the earlier proposed purchase price of RM13 per square feet (psf) by Scientex Bhd.

“This could result in a net land sale gain of over RM320 million,” said the research arm who indicated that they forecast the proceeds range to be between RM352 million to RM479 million.

The gain could more than double the group’s estimated FY24 net profit while also reducing its debt level and finance costs.

Moreover, it was observed that SP Setia is also in advance negotiations with potential joint venture (JV) partners for a 16-acre commercial land in Setia Alam and its 307-acre industrial land in Tanjung Kupang.

Feeling upbeat on the group’s medium-term outlook, Maybank Research added that the land proceeds would allow SP Setia to explore more land banking opportunities in the future.

And on a separate note the research arm also guided that SP Setia is potentially looking to de-gear and unlock the potential of its investment properties through a real estate investment trust (REIT).

“It can continue owning these assets by taking a stake in the REIT and would enjoy dividend income. The REIT can also serve as a vehicle for future injection of SP Setia mature assets, enabling capital recycling,” said the research arm.

The mooted REIT would likely comprise a retail mall, hotel, schools and a convention centre.