Analysts positive on SP Setia’s ‘aggressive’ growth path following new acquisitions
KUCHING: SP Setia Bhd’s (SP Setia) ‘aggressive’ path has been viewed positively by analysts, with some projecting the group’s landbank to surge by some 88 per cent following its latest acquisition
As per an announcement on Bursa Malaysia, SP Setia, Permodalan National Bhd ( PNB) and Amanahraya Trustees Bhd – as trustee for Amanah Saham Bumiputera (ASB) – had entered into a non-binding Memorandum of Intent ( MOI) to commence negotiations on the proposed acquisition by SP Setia of the entire equity interest in I&P Group Sdn Bhd (I&P), which has remaining 4,263 acres of landbanks, to fast track its expansion plan.
Separately, SP Setia, via its wholly owned subsidiary, KL East Sdn Bhd, announced that it had entered into a conditional sale and purchase agreement to acquire a parcel of land measuring approximately 342.5 acres located in Bangi, Selangor, known as Bangi Estate (Bangi Land), from a subsidiary of PNB Development Sdn Bhd (PNB Development), Seriemas Development Sdn Bhd, for a purchase price of approximately RM447.58 million (RM30 per square foot) plus a share of the future audited profit before taxation from the development of the said land, up to a maximum of RM3 per square foot. PNB Development is a wholly
We are confident that the increased acreage should eventually lead to higher earnings (and hence market cap).
owned subsidiary of PNB.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) believed that the re-rating catalyst for SP Setia has just emerged as the company is poised to join the FBMKLCI in three years time, based on MIDF Research’s estimate.
According to MIDF Research, combined with current landbank of 5218 acres, SP Setia’s total landbank will eventually increase by 88 per cent to 9824 acres.
“We are confident that the increased acreage should eventually lead to higher earnings (and hence market cap),” the research arm said.
“The acquisition of I&P is also synergistic as its landbank are located in the growth area of the Klang Valley and Johor Bahru. As for the Bangi Land, synergy can be realized as it is located within the 5-kilometre (km) radius from Setia Ecohill and Setia Ecohill 2 at Semenyih.”
As for the research arm of Kenanga Investment Bank Bhd (Kenanga Research), it was positive on SP Setia’s aggressive growth path and expect the stock to react positively.
“We also hope that this is a window to improve the liquidity of the company,” Kenanga Research said. “For now, we only impute for the Bangi land.”
As such, Kenanga Research reiterated ‘outperform’ on SP Setia, while its target price was upgraded to RM3.85 per share. Turn to Page B2, Col 1
MIDF Research