KUALA LUMPUR (June 12): SP Setia Bhd is on track to meet its RM5 billion sales target despite lower-than-expected earnings posted this quarter, according to PublicInvest Research.
In a note today, analyst Tan Siang Hing of PublicInvest said the property developer would be averaging at least RM3 billion-RM4 billion in local sales and RM1 billion-RM2 billion overseas.
“We understand that the key projects that performed well in this financial year include Setia Ecohill (RM734 million new sales) and Battersea Powerstation, London (RM558 million new sales from phase 2).
“We believe another circa RM1 billion would be recognised from Battersea, given 95% of its residential units in Phase 2 were taken up during the launch on May 1,” said Tan.
He added that the company still had good earnings visibility due to its large unbilled sales of RM11.2 billion.
Tan pointed out that the second quarter sales were slower due to several factors.
“As expected, the 2Q new sales were slower (only RM715 million registered versus RM1.63 billion in Q1) due to festive season, dearth of launches and cautious property market post-DIBS banning and hike in RPGT which were effective since Jan 1, 2014,” he said
Tan maintained his “outperform” rating on the company with an unchanged target price of RM3.85 per share.
The company posted a net profit of RM74.3million (-20.3% year-on-year, -23.3% quarter-on-quarter) in its results announced yesterday.
In a filing with Bursa Malaysia, the company said net profit was hit by RM21 million provisions for Goods Services Tax (GST) and circa RM11 million for employees’ Long Term Incentive Plan (LTIP) expenses.
At 10:33am, SP Setia was down 4 sen to RM2.99 per share with 189,000 shares traded.
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