Analysts maintain ‘buy’ call on SP Setia

PETALING JAYA: Analysts are neutral on SP Setia Bhd’s privatisation agreement with Kuala Lumpur City Hall (DBKL) for land in Cheras in return for the development of the Quality Sustainable People Housing (QSPH) project there, maintaining their ‘buy’ calls on the stock.

MaybankIB Research said it is neutral on SP Setia’s latest land deal in Cheras, and maintained its earnings forecasts and RM3.79 target price on SP Setia with a ‘buy’ call.

“While it is strategically located in the fringe of city centre, we are concerned on its planned development amid an overcrowded high-rise property segment. Also, SP Setia can only start launching post the completion of QSPH phase 1 (within 48 months), putting on financial stress on its cash flow in the near term.”

RHB Research Institute maintained its ‘buy’ rating on SP Setia’s recent share price weakness, but trimmed its target price to RM3.34 from RM3.88, offering an 11% upside from its last closing price.

RHB kept its earnings forecasts unchanged, as SP Setia would likely kick-start the project at the land for exchange after four years, earliest in 2023-2024.

“Despite the incremental value to our RNAV (realised net asset value) estimate, we decrease our target price as we remain cautious on the property market after the impending general election,” said RHB.

PublicInvest Research maintained its ‘outperform’ call on SP Setia with unchanged target price of RM4.50, pending more clarifications.

“We still favour SP Setia for its sizeable and well located landbank, consistent performance, good earnings visibility and decent dividend yield,” it said.