SP Setia (RM4.54; Buy; Price Target: RM5.00; SPSB MK)
9M09 Sales Exceeded Full-Year Target
SP Setia (SPSB)’s 9M09 property sales came in at RM1.25b
(+12% y-o-y), surpassing management's full-year target of
RM1.1b and our estimate of RM1.2b.
3Q09 sales was RM727m (+170% y-o-y, +73% q-o-q),
mainly from Setia EcoPark high-end residential (RM155m),
new launch Sky Residences high-end condo (RM146m), and
Setia Alam township (RM109m).
Withdrawal of the 5/95 financing scheme in mid-Jul 09 saw
Jul09’s sales declining 49% m-o-m (Jun09 raked in record
high sales due to the rush to buy before expiry of 5/95
scheme). Nevertheless, Jul09 sales are still commendable:
+115% y-o-y and higher than 9M09’s monthly average of
RM149m. Aug-Sep 09 sales would likely remain relatively
soft due to seasonal factors ie Hungry Ghost month and
Hari Raya fasting month.
However, sales should continue to be supported by the
launch of Reflections condominium (GDV RM150m, 315
units) at Setia Pearl Island in Penang last weekend. We
understand 64% of the non-Bumi units have already been
taken-up, with overall sales surpassing 50%. Buyers were
predominantly local. ASP has been raised by 3% to
RM340psf (vs RM330psf on Friday). Built-ups ranged
between 1,077 - 1,512 sf (majority 1,260psf). A 5:90:5
financing plan was offered ie 5% initial downpayment,
90% margin of financing, 5% balance downpayment
payable via 12 months interest-free installments by credit
card. We do not discount the possibility of a similar
financing package to be extended to SPSB’s other projects.
Unbilled sales currently stand at RM2.1b (vs 2QFY09:
RM1.5b), 1.9x FY08 property development revenue -
highest in the sector (best earnings visibility). Every 1%
increase in sales would boost our FY10 earnings of RM206m
by +0.3% (assuming 20% margin).
Maintain Buy with RM5.00 target price, based on 10%
discount to RNAV of RM5.54. SP Setia historically traded up
to 5-10% premium to RNAV during peak cycle.
Hwang-dbs 18/9/2009
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