THE BUZZ
Yesterday, SP Setia announced to Bursa Malaysia that its
wholly owned subsidiary has entered
into a sale purchase agreement
with Penang Realty SB for the proposed purchase of approximately 21.3 acres of
freehold land at Lot 1343 Mukim 18, Daerah Timor Laut, Penang for a purchase
consideration of about RM185.6m.
OUR TAKE
More on the deal.
The 21.3-acre land constitutes a portion of the First Grade land held under GRN
16798 for Lot 1343, Mukim 18, Northeast District, Penang with a total area of 23.69 acres. First Grade land is a special
title in Penang which does not carry any
specific category of land use and such land does not need to be converted for
housing development. The remaining portion of 2.38 acres will be retained by
the vendor. The land can be currently
accessed using Jalan Lembah Permai via the land’s eastern boundary. The land is
located about 10 minutes away from international beach resorts along Jalan Batu
Ferringhi and approximately 15 minutes from Georgetown. At RM200psf, the
land appears to be priced on the high side relative to the historical transacted prices.
Nevertheless, we think that there is a
premium attached to its First Grade land
title. SP Setia intends to develop the
land into an eco-themed mixedresidential
development, comprising terraced houses and condominiums, with an estimated gross development value (GDV) of RM1.1bn. We
view the acquisition positively as it is in line with SP Setia’s strategy of increasing its presence in Penang, which
is one of the favourite destinations for local and foreign property
investors.
Maintain Trading Buy. We continue to value SP Setia based on 2.3x
FY12 P/NTA, which is equivalent to the stock’s 5-year historical average P/NTA,
and arrive at our unchanged FV of RM4.34.
Source: OSK
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