KUALA LUMPUR: SP Setia Berhad (SPSB) is making significant strides in its property development efforts, leveraging industrial projects, steady township sales, and international ventures, according to both Maybank Investment Bank and CGS International.
Maybank IB emphasised the potential of SP Setia's industrial developments, such as Setia Alaman (RM3.1 billion GDV), Tanjung Kupang (RM1.9 billion GDV), and Setia Fontaines (RM1.7 billion GDV), which are expected to be key growth drivers.
"Setia Alaman is anticipated to contribute starting FY25E, while a joint venture for Tanjung Kupang's transformation into a high-tech park is expected in 1H25," Maybank said in a note.
Meanwhile, CGS International shed light on the real estate company's robust sales figures for the first nine months of FY24, reporting RM 3.2 billion in new property sales, including RM 731 million from land transactions, which represents 73 per cent of its full-year target of RM 4.4 billion.
Despite these successes, CGS highlighted that excluding land sales, core property sales of RM 2.7 billion grew only 2.0 per cent year-on-year (YoY) and that the group faced a core net loss of RM82.3 million due to challenges like higher joint venture losses from the Battersea Power Station project.
However, Maybank IB pointed out SP Setia's efforts to strengthen its financial stability by reducing its net gearing to 0.35x from 0.53x through landbank management as the group is preparing to list a diversified REIT that will include retail malls, offices, schools, and industrial properties, offering recurring income and debt reduction opportunities.
Notably, the recent preview of Parkside Residences received a positive market response, with a 29 per cent reservation rate, demonstrating demand for high-quality residential properties, according to Maybank IB.
While the company has shown resilience, CGS International remains cautious, reiterating a Hold rating as the broking highlighted that delays in new launches or a slowdown in housing demand could weigh on future performance.
However, it raised its FY24 forecast after factoring in the lumpy earnings from land sales and the target price to RM1.41.
Meanwhile, Maybank IB maintained its "Buy" rating, earning forecasts, and target price of RM1.64.