Period 1H12
Actual vs. Expectations
1H12 net profit of RM166m was within expectations,
accounting for 46% each of the street’s FY12E earnings of RM360m and our RM359m.
7M12 sales of RM2.1b (+30% YoY) are within SPSETIA’s FY12E
target of RM4.0b and our RM3.8b estimate. Top contributors are its Johor townships,
followed by Setia Alam/Eco Park, KL Eco City and Fulton Lane.
Dividends Interim GDPS of 5.0 sen proposed, which makes
up 43% of our FY12E GDPS of 11.5 sen (3.0% yield).
Key Results Highlights
YoY, 1H12 net profit rose 8%, in line with its top line
growth of 9% and stable property PBT margins 21.8% (+0.7ppt YoY). Stripping off
1H11’s one-off gain for disposal of Tenby to its associate company, 1H12 core
earnings rose 28%.
QoQ, 2Q12 jumped by 25% to RM92m due to last quarter’s low
base effect (short working quarter, rainy season, festivities, etc.).
Outlook Tan Sri Liew and his team are confident of meeting
their target sales of RM4.0b as they expect Johor, KL Eco City, Setia Alam/Eco
Park and others (Aeropod@Sabah, Setia Eco Glades@Cyberjaya, overseas) to drive
sales.
Target launch for Battersea (GDV: RM40b) is April 2013, but
we have not factored the project into
our earnings or
RNAV as they
are in the process of completing the deal (1st
week of July) and hence, are unable to
share project details yet (size of first launch, margins, etc). Income recognition
will be on a completion basis.
Change to Forecasts
There is no change to our FY12-13E earnings of RM359m-RM424m
based on our assumed sales of RM3.8b-RM4.0b. Unbilled sales of RM4.8b provides
close to 2 years visibility.
Rating Maintain MARKET PERFORM
In line with our Neutral sector call. Although there are
catalytic projects at hand, it appears that SPSETIA is finding it tougher to
command premium valuations without sufficient liquidity.
Valuation Maintain Target Price of RM3.90 based on
24%* discount to our FD SoP RNAV of RM5.11.
Risks Sector risks and liquidity issues.
Source: Kenanga
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