S P SETIA BUY Maintained with FV of RM1.84 Driven largely by Johor land sales

S P Setia‘s financial outlook remains strong with a “Buy” recommendation, supported by a favorable Fair Value of RM1.84.

The company’s robust performance is largely driven by significant land sales in Johor, positioning it well for continued growth and profitability in the Malaysian real estate market.

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“We maintain BUY on S P Setia (Setia) with an unchanged fair value (FV) of RM1.84/share based on a discount of 40% to our RNAV and neutral ESG rating of 3 stars. Our FV also implies FY25F PE of 25x, on par with Setia’s 1- year trailing PE,” says AmBank Research.

S P SETIA BUY Maintained

Setia’s 1HFY24 core net profit (CNP) of RM382mil came in within our expectation but above consensus’. Excluding lumpy non-core gains of RM70mil mainly from the sale of 50% stake in Retro Highlands to MMC, 1HFY24 core net profit accounted for 46% of our FY24F net profit and 58% of street’s.

In 2QFY23, Setia registered new development sales of RM883mil (+28% QoQ), driving 1HFY24 new sales to RM2.3bil (+37% YoY) and attain 52% of its FY24F sales target of RM4.4bil.

For FY24F, the group’s earnings will continue to be largely driven by land sales of which RM396mil is expected to be recognised in 2H2024.