TA Research says it is not making any changes to its earnings forecasts for now, pending the completion of the disposal, which is targeted for the second quarter of 2024.
PETALING JAYA: S P Setia Bhd’s move to sell 500 acres of land in Semenyih, Selangor, to Mah Sing Group Bhd
is seen as a move to monetise non-strategic landbank and focus on launches in its matured townships.
The developer’s indirect wholly-owned subsidiary, Petaling Garden Sdn Bhd, has agreed to sell 500 acres in Semenyih to three wholly-owned subsidiaries of Mah Sing, namely, Elite Park Development Sdn Bhd, Grand Prestige Development Sdn Bhd and Mestika Bistari Sdn Bhd, for RM392mil cash or RM18 per sq ft.
“We are not surprised by the move, given that it aligns with S P Setia’s strategic plan to improve efficiency by monetising some of its landbank.
“S P Setia currently has 21 ongoing projects in the central region, and post-sale of the above, the group will still have an adequate total remaining land bank of 6,959 acres (remaining landbank in the central region post-disposal of about 3,496 acres),” TA Research said in a note on S P Setia.
The research house added S P Setia intends to use the sale proceeds on its other project developments for immediate launches and pare down debt.
S P Setia aims to lower its net gearing from 0.56 times as at March to 0.5 times by the end of the year through measures such as repatriating cash from overseas projects, monetising non-strategic landbank and clearing unsold inventories.
The Semenyih disposal is anticipated to generate an estimated gain on disposal of around RM31mil, said TA Research.
“We make no changes to our earnings forecasts for now, pending the completion of the disposal, which is targeted for the second quarter of 2024.
“Maintain ‘buy’ on SP Setia with an unchanged target price of 60 sen per share based on calendar year 2024 price-to-book of 0.2 times,” the research firm said.
