KUALA LUMPUR: SP Setia Bhd is progressing steadily towards its full-year property sales target of RM4.4 billion, achieving 73 per cent of the goal in the first nine months (9M) of 2024, according to CIMB Securities Sdn Bhd.
The property developer recorded RM3.2 billion in sales for the 9M period, supported by unbilled sales of RM3.5 billion as of September 30, 2024.
Internationally, the group has launched 383 La Trobe Street, which has a gross development value (GDV) of A$887 million (RM2.7 billion) in Melbourne's central business district.
The first phase of construction works is slated to start in the first half of 2026 and expected to complete in 2028, while the other remaining phases are expected to conclude in mid-2029.
"Over the remainder of 2024, it aims to launch nearly RM2 billion worth of new properties, having recently previewed Parkside Residences—part of the Setia Federal Hill Phase 1 development (GDV: RM1.4 billion)," CIMB Securities said in a research note.
On third quarter (Q3)'s financial results, CIMB Securities said SP Setia's core profit slipped 68 per cent from the quarter before, largely on the back of lower land sales revenue, bringing 9M 2024 core earnings to RM304 million.
Although this accounted for only 64 per cent of the firm's full-year estimates and 53 per cent of consensus, the firm deemed the 9M results to be in line with expectations, in anticipation of another land sale transaction that could be booked in the fourth quarter.
CIMB Securities maintains a "hold" call on SP Setia with an unchanged target price of RM1.50 a share, supported by a decent FY24 dividend yield of 3.2 per cent and notable improvement in its de-gearing efforts, where the net gearing ratio fell further to 35 per cent from 41 per cent in the previous quarter.
"Nevertheless, we foresee limited upside to its share price in the near term, as the recovery in core development profits and other catalytic ventures is still in its infancy stages.
"A successful rollout of its industrial footprint and other strategic alliances could narrow the stock's steep 62 per cent discount versus its revalued net asset value (RNAV).
"Likewise, any delays to its planned launches for FY25 could tamp sentiment on the stock," the firm added.