- SP Setia’s 1QFY12 net profit came in at RM74mil which only
covers 18% and 21% of our and consensus’ estimates respectively. As expected no
dividends were declared for the quarter.
- Although revenue slid by 5%, earnings jumped by 19% YoY to
RM74mil due to strong GP margins of 30% (previously 25%) – mainly attributable
to strong selling prices and favourable product mix.
- We believe our estimates are intact given that the group
has a massive unbilled sales of RM3.9bil (1.8x FY11 revenue) and margins should
also be robust as they are realising strong property prices against attractive
land cost e.g. Setia Alam and Setia Eco Park's land cost at RM5-RM8psf.
- However on sequential basis, net profit dropped by 10%
because of seasonal factor where construction works was affected by festive
seasons. Hence we are not changing our estimates as we expect net income to
rebound in the coming quarters underpinned by stronger progress billings.
- Setia broke another record where it generated highest ever
new sales in a single quarter of RM933mil (versus RM735mil in 1QFY11) for
1QFY12.
- Latest set of figures also show that Setia already chalked
up a strong RM1.23bil (+23% YoY) in new sales for the first 4 months into the
current fiscal year. We believe its target of RM4bil is not a challenge given
that 1/3 of this has already been secured by strong takeups at KL Eco
City.
- Sales were driven by mostly from boutique offices from KL
Eco City and Fulton Lane in Melbourne apart from the bread and butter projects
from Setia Alam, Setia Eco Park and Setia Tropika.
- Going forward, the group would be launching Setia Eco
Glades in Cyberjaya, KL Eco City residential tower 1, 18 Woodsville – maiden
Singapore venture and 11 Brook Residences Penang.
- We maintain our HOLD rating at this juncture with our fair
value unchanged at RM3.95/share.
Source: AmeSecurities
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