Property market “moving sideways” but launching RM4.05b of GDV in H2 2018

Do you know that you can buy S P Setia for RM2.80 today? Not the whole company yeah but one tiny part of it. I meant 1 unit of their stock in Bursa Malaysia. The potential return is pretty okay, if the analysts are right. According to the average target price by analysts for SPSetia, it is RM3.75 which actually representing a potential upside of 33 percent and if it does rise to the price target within the next 12 months, then one would have a return of 33 percent per annum! Please do not take this as a buy or sell recommendation yeah. Personally, I do not own any SP Setia stock currently. Here’s that price target from different analysts for your reference.  Anyway, S P Setia is planning to launch new projects with an estimated gross development value (GDV) of RM4.05 billion in the second half of the year (2H18). That full article about their launch is in here. 

S P Setia President and chief executive officer Datuk Khor Chap Jen said that the group has launched RM2 billion worth of properties in H1 2018 and it will now focus on launches in the Klang Valley, with planned projects in Setia Alam, Setia Ecohill, Setia Ecohill 2, Setia Eco Templer, Setia Eco Glades, Setia Sky Seputeh (Tower B), Temasya Glenmarie, Setia Alamsari and Setia Alaman, all with a combined GDV of RM2.23 billion. It has one project in mainland Penang called Setia Fontaines to be launched by 2nd 2018. He shared, “The new project will kickstart with the launching of shops and some linked detached units with a selling price of less than RM400,000 per unit.”  His view about the property market is that the local property market appeared to be “moving sideways” but there’s a robust underlying demand for landed units. Thus, he property developer would emphasise smaller built-up landed units as they are well received by property buyers amid the cautious market sentiments and stringent bank lending. Full financial result from S P Setia for download here. 

S P Setia’s target for 2018 is RM5 billion of sales. Khor said that S P Setia’s smaller built-up landed units termed the “Starter Home” series had proven to be successful, as its flagship township Setia Alam topped local sales. (I know this because my friend failed to get a unit…) He shared, “The interest in the Starter Home series remained strong, as they were within the affordability range of most first-time homebuyers seeking landed homes in established townships.” On an overall basis, the group has total unbilled sales of RM8.12 billion, anchored by 46 ongoing projects and the remaining land bank of 9,587 acres (3,880ha) with a GDV of RM155.94 billion as at June 30, 2018. He said that abolishment of the goods and services tax did not result in a surge in property demand. The buyers were still waiting for the government’s proposed housing policies. Earlier article here: Housing 2.0 in Sept 2019  Results wise, in the second quarter ended June 30, 2018, S P Setia recorded a 77% year-on-year increase in net profit to RM442.74 million from RM250.57 million. This includes a RM343.8 million one-off provisional fair value gain. Revenue rose to RM925.97 million in the second quarter from RM866.35 million a year ago. On a 6 months cumulative basis, net profit climbed to RM504.23 million from RM362.68 million a year earlier with a lower revenue of RM1.58 billion versus RM1.89 billion previously. Do read here: News article from here.  Happy following!

written on 24 Aug 2018

Next suggested article:  SP Setia’s FY18? Launching RM7 billion and hitting RM5 billion sales.. 

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