SP Setia to see better performance ahead
PETALING JAYA: Despite mixed reactions to property developer SP Setia Bhd 's first quarter ended March 31, 2025 (1Q25) financial results released on Wednesday, there is broad consensus that the company should perform better from 2Q25 onwards on more property launches.
Analysts who met the company's management following the release of its 1Q25 results were mixed in their reactions but noted that the upcoming quarters would see improvement.
RHB Research, which maintained a 'buy' call on the stock with an unchanged target price of RM1.72, said the company missed earnings expectations as slower property launches and sales resulted in a largely muted quarter.
Keeping its earnings forecast unchanged for now, it said management shared that the bulk of property launches should come in the next two quarters, with earnings to pick up and improving from industrial land sales in in Setia Alaman, recognition of the Taman Pelangi land sale, and newly launched projects in Australia and Vietnam.
MIDF Research, which maintained a 'neutral' call on the stock and revised the target price to RM1.17 from RM1.21, said management remains committed to meet new sales target of RM4.8bil on the back of planned launch of RM5.1bil of property development and RM300mil industrial property.
TA Securities believes the sales target for the financial year ending December 31, 2025 (FY25) can be achieved as year-to-date sales including for bookings have reached 23% of target and the planned roll out of new launches, with a fifth of the target to be driven by land sales together with potential upside from the finalisation of additional land transactions from joint ventures in Tanjung Kupang and Setia Alaman.
The brokerage has not made changes to FY25 to FY27 earnings forecast. It said the management has viewed 1Q25's results 'as a temporary blip', also confirmed that plans for a diversified real estate investment trust (REIT) comprising malls, offices, schools, convention centres, hotels and industrial properties remained in place with an expected valuation of RM1.5bil or more.
It noted that an advisor has been appointed, and the REIT listing targeted for the first half of next year. 'We estimate that retaining a 40% to 60% stake in the REIT could generate RM600mil to RM900mil in cash proceeds, strengthening SP Setia's liquidity for future growth,' it said. It has maintained a 'buy' call with a revised target price of RM1.97 from RM1.92.
HLIB Research has also maintained a 'buy' call on the stock with an unchanged target price of RM1.80, viewing that results were in line with stronger quarters ahead supported by the strategic portfolio restructuring through monetising land and assets, debt reduction and cost optimisation to enhance financial resilience, with new revenue streams providing additional growth levers anchored by core property development business.
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