Posted on 16 Apr 2015
For the financial year ended October 31, 2014, it reported a net profit of RM405.68 million against RM418.35 million it made a year ago.
In a research note yesterday, Alliance DBS believes the property firm's total unbilled sales of RM11.5 billion can easily last for two years.
The research house noted that SP Setia is set to enjoy lumpy contributions from its overseas projects, with RM1.5 billion and RM2.3 billion in unbilled sales to be recognised progressively in FY15 and FY16 respectively.
For FY15, it will be mainly driven by the RM1.4 billion Fulton Lane project in Australia while the Battersea Power Station's phase 1 project in the UK will see unbilled sales of RM1.5 billion coming in by FY16.
"We raised our FY15 earnings by 9% mainly due to our conservative recognition of progressive billings for some projects slated for completion this year," it said.
SP Setia achieved RM1 billion worth of property sales in the first quarter of FY15, of which RM737 million is attributed to the Battersea project.
"This places the company on track to achieve its RM4.6 billion sales target for FY15 (60% from Malaysia)," the research house said.
While SP Setia has only achieved RM250 million domestic sales in the first quarter of FY15, which is still far lagging behind the targeted RM2.8 billion sales from Malaysia, Alliance DBS expects stronger sales in the second half of FY15 as it rolls out more launches.
Alliance DBS is of the view that SP Setia's township products such as Setia Alam, Setia Eco Hill and Setia Eco Glades will continue to do well given the strong demand for lifestyle landed properties with good infrastructure and amenities.
"Its low land cost will provide strong competitive advantage against its peers," it added.
SP Setia management has targeted to launch over 2,000 units of mid-range
products in FY15 to cater to the robust demand for affordable homes.
Even though SP Setia's succession plan remains a drag on its share price performance, Alliance DBS said its business operation remains intact and property sales continue to be encouraging despite the softer sentiment.
"We believe the succession plan concern has been overplayed and the solid fundamentals of the Group offer strong investment merit," it said.
Meanwhile, Alliance DBS said with SP Setia's 4,273 acres of landbank potentially worth RM74 billion in gross development value (GDV), there is little need for the group to replenish its landbank in the near term, especially when land prices remain at elevated levels.
Alliance DBS is maintaining a "buy" call on SP Setia, with an unchanged target price of RM4.10.
